Uber continues global expansion by snapping up Middle Eastern rival
In brief: Uber’s ambitious plans for its international expansion have suffered a few setbacks in places like Russia and China, but the company scored a new deal in the Middle East. The ridesharing giant will take over rival Careem in the region, but will have to abide by a set of conditions so the market remains a level playing field.
Uber may have lost its license to operate in London due to safety concerns, but the company is still quickly expanding in other regions like the Middle East, as it hopes to become profitable by 2021.
Back in March, the ridesharing giant announced plans to acquire Dubai-based rival Careem after nine months of negotiations between the two companies. Now, Egyptian regulators have greenlighted the deal, which is estimated at $3.1 billion and is expected to close in January.
Careem serves the greater Middle East region, with major markets including Morocco, Egypt, Jordan, Pakistan, Saudi Arabia, Turkey, and the United Arab Emirates. Of that group, Egypt was one of the most significant for the deal because of its big population and also where the deal was facing some hurdles.
The regulatory approval has come with a few caveats, such as the fact that Careem will operate as a wholly-owned subsidiary of Uber under an independent brand and management team.
Furthermore, Uber had to make a few commitments to appease the Egypt Competition Authority, who analyzed over 270 million trips on the local and international ridesharing markets. For example, Uber won’t be able to increase Uber X and Careem Go pricing beyond a limit imposed by the ECA.
Uber will also have to drop any exclusivity deals, and surge pricing will only be able to jump to a maximum of 2.5 times the normal fare rates, regardless of the increase in demand. But more importantly, the ECA said surge pricing can’t apply to more than 30 percent of all trips every year, and competitors will get access to Uber’s mapping and trip data to create a level playing field.
In related news, co-founder and former CEO Travis Kalanick will be stepping down from Uber’s board of directors this month after selling $2.5 billion in stock holdings.
The company is currently embroiled in tax disputes with the state of New Jersey, but is expanding again after merging its Chinese unit with Didi Chuxing and its Russian unit with Yandex.