Read the email Uber's CEO sent employees about the company's $3.1 billion acquisition of a major competitor
- Uber is buying its rival Careem for $3.1 billion, it confirmed Tuesday.
- The acquisition is a bid for dominance in a fiercely competitive region.
- Uber's CEO Dara Khosrowshahi told employees that Careem will remain an independent brand.
Uber is buying Careem, one of its biggest competitors in the Middle East, in a $3.1 billion deal for dominance in a highly competitive region.
The deal was finally confirmed on Tuesday after more than nine months of start-and-stop negotiations. Careem will remain an independent brand, Uber said, but investors will be completely bought out through $1.4 billion in cash and $1.7 billion in convertible notes.
In an an interview in February, Careem CEO Mudassir Sheikha explained why it would be very difficult for Uber to reach significant scale in the region. In hindsight, his comments explain why the deal makes perfect sense for Uber.
"For a global player to come in and start providing a service to the top 2% to 3% of the population is not difficult, they're used to the convenience," Sheikha said. "But as soon as you start going down the masses, you require a lot of tailoring."
For example, "It took Uber almost 2 years to realize that very few people in this region have a credit card," he said. "That's a very basic thing. It's 101 in this region."
Read more: The CEO of Careem explains how the company is scaling up to beat Uber in a quickly growing market
At the time, Sheikha ruled out an acquisition, and said the company was continuing to fundraise. That's clearly no longer the case.
In an email to Uber employees, CEO Dara Khosrowshahi called Sheikha and his co-founder, Magnus Olsson, "first-class entrepreneurs." Here's his company-wide email, as provided by Uber: