According to a report by Bloomberg, Uber is in the midst of advanced talks to acquire its ride-hailing competitor Careem Networks.
It’s that time again.
It’s time once more for the eternal Uber-Careem tease that’s had investors waiting with bated breath for many months now. Will Uber finally acquire Careem, or are we bound to this eternal ballet of “will they, won’t they?”
Now, a recent report by Bloomberg would have us think that deliberations are nearing their end.
A finale on the horizon?
US business news site Bloomberg has long been the one to provide sourced information regarding the Careem acquisition story. Yet, the true direction of this supposed transaction was in a constant tug-of-war.
When everyone was under the impression that Uber was very likely going ahead with the acquisition, Careem’s co-founder Magnus Olsson vaguely rebuffed the matter, stating at Tech Crunch’s Startup Battlefield in Beirut last October that “the reason we started Careem and the reason we continue doing what we’re doing, is to simplify the lives of people in the region, do something meaningful and build an awesome organization that inspires. If you’re going to keep inspiring, you have to stay independent.” This sunk the matter into further limbo.
Now, Bloomberg has quoted sources familiar with the matter, reporting that Uber “is in advanced discussions to buy its Dubai-based rival Careem Networks.”
According to the report, the advanced talks could supposedly result in a cash-and-shares transaction that values Careem at about $3 billion in the coming weeks.
Previously, Bloomberg had reported that deliberations supposedly put a Careem valuation at around $2-$2.5 billion.
Careem’s most recent round of funding in October saw the company raise $200 million, with primary investors including Prince Waleed Bin Talal’s Kingdom Holding.
Uber, on the other hand, has seen an unrivalled financial commitment from Saudi Crown Prince Mohammed Bin Salman’s Public Investment Fund (PIF), which owns a 5% stake worth $3.5 billion in the company.
Pressure mounting on Uber?
Bloomberg’s report comes at a critical time for Uber, as the next day after the story came out, competitor Lyft had officially filed for an IPO, one step closer than Uber to that much-desired public standing. It will list on NASDAQ under the stock ticker “LYFT”.
According to CNN, the company filed paperwork on Friday March 1st to raise as much as $100 million in its public offering. “That placeholder amount could change, depending on investor demand,” the news site said.
Both Lyft and Uber have not been profitable for many years now, and an IPO is a much-needed lifeline for both companies.
In the first place, Uber’s attempt to absorb Careem was to reduce competition in international markets. Didi Chuxing, China’s answer to US-based Uber, essentially pushed their Western rival out of the Chinese market not too long ago. Uber had to sell its operations there to Didi in mid-2016, resulting in a near monopoly for the Chinese ride-hailing app.
A Careem acquisition at this moment in time could be a show of power and an attempt for a comeback from Uber. With the company being mired with rumours of unhealthy workplace practices and further controversy, the company needs what little victories it can get.
Uber's most recent valuation put it at $76 billion in 2018. With an IPO they hope will come to fruition in 2019, it hopes to arrive at a whopping $120 billion valuation, according to reports that surfaced in October last year.
As for Lyft, it “disclosed sales of $2.2 billion in 2018, while its valuation is said to range from $20 billion to $25 billion,” Bloomberg said, citing a person familiar with the matter.