Featured image via Uber
Earlier this year, the renowned American multinational transportation network company, Uber, bought out its rival, Careem, in order to dominate the ride-hailing business in the Middle East. According to Reuters, the offered deal was 3.1 billion dollars; 1.4 billion dollars in cash and the rest in the form of convertible notes, where each Uber share is equivalent to 55 dollars. With the numbers agreed on, the only remaining step was the legal approval from the 15 countries to which Careem is currently established throughout the Middle East, North Africa, and Pakistan.
According to Asharq Al-Awsat, Uber announced UAE’s Minister of Economy, His Excellency Sultan Bin Saeed Al-Mansouri, approved and cleared the first regulatory hurdle of its acquisition of Careem, making it the first country involved to grant its approval. So that’s one country marked off the checklist.
To quote the Uber spokesperson after the decision was made, “We welcome the decision by HE Sultan al-Mansouri, Minister of Economy of the UAE, to unconditionally approve Uber’s pending acquisition of Careem. Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world.” Across the aisles, a spokesperson from Careem said, “Unconditional approval of this deal by the UAE government is a positive step towards the closure of the biggest technology transaction in the region. We welcome the decision and look forward to pursuing the platform opportunity and leapfrogging the region into the digital future.”
Asharq Al-Awsat also shared some predictions about the benefits of the merger based on the information provided. For example, it believes the deal will provide an opportunity to combine the two companies’ expertise and operational capabilities in a wide range of areas, contribute to diversifying services for passengers and enhancing their confidence, and help determine the pick-up and drop off locations of the passengers more accurately and efficiently by combining the mapping technologies of the two companies. The list of advantages goes on and on.
So where does Egypt stand in all of this? Based on our research, it is not a favorable position so far. In September 2018, before the merger was officially announced, Ahram Online stated that the Egyptian Competition Authority (ECA) warned Uber and Careem, against proceeding on the reported deal without receiving prior permission from the authority and threatened them with a fine of up to 500 million EGP for each company. Sadly, time did not change their opinions, because last March, Enterprise said that the ECA expressed their unhappiness with the merger, saying in a statement that the combination of the two businesses “may lead to a significant impediment on effective competition in the markets” by restricting choice for riders and drivers alike. Will Egypt eventually yield? That is the big question, but only time will reveal the answer.
The deal is expected to be completed during the first quarter of 2020, so let’s wait and see what happens!