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Ride-hailing service Uber announced on Tuesday it has acquired Mideast competitor Careem for $3.1 billion (Rs 21,361 crore), giving the San Francisco-based firm the commanding edge in a region with a large, young, tech-savvy population.
It comes as Uber's losses widened last year ahead of plans for an initial public stock offering this spring.
It marks the largest technology transaction in the Middle East — outside of Israel — and propels the Dubai-based firm to legendary status among the region's budding tech startup scene.
Uber CEO Dara Khosrowshahi said the acquisition of Careem marks "an important moment for Uber as we continue to expand the strength of our platform around the world."
In a memo to staff, Khosrowshahi said that keeping the Careem app intact allows Uber to try out new ideas across both brands. Over time, the firms will integrate part of their networks, he said.
Egyptian regulators expressed concern on Tuesday, 26 March of a merger leading to a monopoly in the market, which they cautioned could lead to price increases, degraded service quality and limited consumer choice. Egypt's competition authority invited third parties to come forth with their concerns by the end of April as part of its investigation into the proposed deal.
Careem, which launched in 2012 — three years before Uber entered the local market was its stiffest competitor in the Middle East.
Careem, founded by two former management consultants at McKinsey & Co., is popular in countries like Egypt and Pakistan because it allows customers to use cash, while Uber was initially a credit card-only system. Last year, Careem was said to be exploring a bus service for Egypt's lower-income riders.
Dubai now has three of the region's most high-profile startup success stories:
Careem's CEO Mudassir Sheikha described the acquisition as a "milestone" for the company and for budding entrepreneurs in the region. Under the deal, he will lead Careem's business under Uber and report to a board comprised of three Uber representatives and two from Careem.
Saudi Technology Ventures, one of Careem's investors, said the local ride-hailing firm succeeded by using its deep local knowledge and expertise to cater to the needs of young people.
Other Careem investors include Kingdom Holding, chaired by Saudi Prince Alwaleed bin Talal, German car manufacturer Daimler AG, Japanese tech firm Rakuten and Mideast venture capital firm Wamda. Uber's investors include Saudi Arabia's sovereign wealth fund, which has a $3.5 billion stake in the ride-sharing app.
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