Egyptian Govt approves Uber's acquisition of Careem for $3.1b
The Egyptian government has approved of Uber’s move to acquire Dubai-based ride-share company Careem for $3.1 billion. Launched in 2012, Careem now serves more than 100 million users. Notably, the Arabian Republic only authorized the deal with specific conditions. Uber now looks to expand its Middle Eastern footprint significantly next year as it has cleared its biggest regulatory hurdle.
Uber initially announced plans to acquire its Middle Eastern rival in March after nine months of negotiation. Ultimately, Careem agreed to a buyout offer of $3.1 billion, a premium of 55 percent over its 2018 $2 billion valuation. Moreover, the purchaser will also allow its new subsidiary to operate as an independent brand.
The two firms intended to close their deal by January 2020, barring regulatory approval by various regional authorities.
With a population of over 100 million people, Egypt is the Middle East’s largest ridesharing market. In the past, Uber and Careem dueled for the title as the nation’s largest transport network. By coming together, the two firms seek to maximize their market share. However, the Egyptian Competition Authority (ECA) wanted to ensure the tie-up didn’t hurt local transportation startups or consumers.
Accordingly, Uber and Careem have agreed to abide by several key regulatory conditions. The ECA requires the merged firm to share its mapping and trip data with any emergent rivals. Besides, the transportation companies must also share consenting rider’s information with any competing companies.
The ECA consumer protection mandates also include complying with a 10 percent price increase cap issued by the organization and limiting search pricing to 2.5 times the regular trip cost. The government agency also requires that the two corporations not raise their Egyptian driver commissions.
Furthermore, an ECA-approved trustee will review Uber/Careem’s data monthly to ensure regulatory compliance.