Uber has acquired rival ride-hailing service Careem in a deal worth $3.1 billion.
On Tuesday, the company said the deal has been inked for $1.4 billion in cash and $1.7 billion in convertible notes. Subject to regulatory approval, Uber believes the acquisition will close in the first quarter of 2020.
Dubai-based Careem offers ride-sharing services in over 90 cities in 15 countries. The company's services also include a digital payment platform, Careem Pay, and delivery service, Careem NOW.
Under the terms of the deal, Careem will become a wholly-owned subsidiary of Uber but will still operate under the same brand and with the same leadership team in place.
Uber will acquire all of Careem's mobility, delivery, and payments businesses, which span across countries including Egypt, Jordan, Pakistan, Saudi Arabia, and the United Arab Emirates.
Uber says the buyout represents an "opportunity for both companies to rapidly expand and capitalize on the region's underpenetrated mobility opportunity and growing digital economy."
Uber launched in Dubai five years ago, coming into direct conflict with other, established ride-hailing services. The city is a hotbed for new and experimental transportation technologies, including the pilot of electric taxi drones and mobility services for finding a ride.
Ahead of its upcoming IPO, Uber is not enjoying the full financial fruits of its labor and lost roughly $1.8 billion in FY2018, although much of the 'loss' was made in the name of aggressive investments.
This is why the deal makes sense: if the company can tap into already-established client bases and services beyond ride-hailing in underdeveloped markets, Uber has the opportunity to improve the balance sheet by taking advantage of new -- but already developed -- revenue streams rather than relying purely on booking rates.
The ride-hailing service intends to gradually integrate Careem and Uber systems, but for now, Uber wishes to focus on "building new products and trying new ideas across not one, but two, strong brands, with strong operators within each," according to Uber CEO Dara Khosrowshah.
"This is an important moment for Uber as we continue to expand the strength of our platform around the world," Khosrowshah said. "With a proven ability to develop innovative local solutions, Careem has played a key role in shaping the future of urban mobility across the Middle East, becoming one of the most successful startups in the region. Working closely with Careem's founders, I'm confident we will deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world."
Careem CEO and co-founder Mudassir Sheikha added that the acquisition will be a "catalyst" for "the region's technology ecosystem by increasing the availability of resources for budding entrepreneurs from local and global investors."