Email sent to Uber team from chief executive Dara Khosrowshahi From: Dara To: Team@ Date: March 25, 2019 at 11:45pm PT Subj: Accelerating in the Middle East Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year. Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers. I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region. This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build. It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber. Uber on, Dara

Uber Technologies has agreed to buy Careem in a $3.1 billion (Dh11.39bn) deal that will allow the Dubai ride-hailing technology platform to remain independent.

This is the largest technology sector transaction in the Middle East so far, eclipsing Amazon’s $580 million acquisition of Souq in 2017.

In a highly anticipated announcement on Tuesday morning, it was confirmed that Uber will buy all of Careem’s mobility, delivery, and payments businesses across all of its markets including Egypt, Jordan, Pakistan, Saudi Arabia and the UAE. The $3.1bn is split into $1.4bn in cash and $1.7bn in notes convertible to Uber stock.

The deal is expected to close in the first quarter of next year and is subject to regulatory approvals, the companies said in a joint statement.

Once it is completed, Careem will become a wholly owned subsidiary of Uber but both will operate their regional services and brands independently.

The acquisition by Uber of a major rival in about 24 of the more than 400 cities where it operates comes ahead of its imminent IPO on the New York Stock Exchange, which is expected to value the company at $120bn.

Their “joining forces”, as chief executive of Careem Mudassir Sheikha put it, has global resonance given the international investors that have backed both Uber and Careem over the years.

Since the original founders Mr Sheikha and Karl Magnus Olsson let in institutional investors in 2013, Careem has raised $771m from the likes of Mercedes-Benz's parent Daimler, Japan’s Rakuten, Saudi Arabia’s Al Tayyar Group and a number of venture capital funds from the region, Silicon Valley and elsewhere. A valuation on Careem of above $3bn represents the creation of immense shareholder value since it was formed in 2012.

Uber, based in San Francisco, also has a major regional investor backing it, in the Public Investment Fund, which took a 5 per cent stake for $3.5bn in 2016. Saudi Arabia is one of Careem’s most important markets and a third founder, Abdulla Elyas, came on board in 2014 when his digital addresses company Enwani was acquired to support expansion in the kingdom.

Ride-hailing and other mobility-related technologies are helping fuel social change across the Middle East, North Africa and South Asia, such as supporting women’s greater participation in the workforce. The Uber-Careem deal should pave the way for further innovation in transport given the companies’ combined scale and increased efficiency. Together, they could speed up the development of a “super-app” offering digital payments and last-mile delivery services, they said.

Roy Cooper / The National

Mr Sheikha called the deal with Uber a “milestone moment” for the region’s technology sector.

“The mobility and broader internet opportunity in the region is massive and untapped, and has the potential to leapfrog our region into the digital future,” he said.

Both Uber and Careem invest heavily in research and development. Together they can better pool their resources and there is likely to be an increased concentration of engineers, data specialists and R&D working on this region when needed. There are no expected job losses as a result of Uber acquiring Careem, it is understood.

The combination is also expected to result in a better user experience for customers as platforms are improved thanks to the combined technology resources. Prices are unlikely to be affected in markets in which they both operate, which will assuage consumers. Hiking up fares is seen as counter-productive, creating room for another competitor to take advantage.

The decision to keep Careem an independent entity with a new board that includes three Uber representatives as well as Mr Sheikha, who remains chief executive, and Mr Olsson, is contrary to market expectations. However, it should not be seen as unusual in the context of Uber’s recent experiences in other emerging markets and its evolving corporate culture under Dara Khosrowshahi, who took over the role from founder Travis Kalanick.

Mr Khosrowshahi told Uber employees in an email on what he described as a "great day for the Middle East" that "after careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each".

From left, Careem co-founders Magnus Olsson, Mudassir Sheikha and Abdulla Elyas. Photo courtesy Careem

He praised Mr Sheikha and Mr Olsson as "first-class" entrepreneurs who shared Uber's vision.

“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 start-ups in the region,” the Uber chief executive was quoted as saying in the joint statement .

In Russia, Uber is part of a joint operation which is led by Yandex. In China, Uber has a minority interest in Didi Chuxing, which is also an investor in Careem.

It is expected that Uber’s technology prowess allied with Careem’s ability to develop innovative local solutions will result in an overall increase in customers, thanks to higher quality, variety of services and a broader range of price points.

"Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region," Mr Khosrowshahi wrote to staff.

For Uber’s drivers and Careem’s captains, this could result in an increase in the growth of trips, providing greater earning capacity, the companies said.

Uber chief executive Dara Khosrowshahi says the deal with Careem is great for the Middle East. Reuters

“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,” Mr Khosrowshahi said.

It is unclear exactly when serious talks first began between Uber and Careem, although rumours have been persistent over the past year, or what was the impetus to conclude a deal now. However, it is understood that the positive relationship that has formed, between Mr Khosrowshahi and counterparts Mr Olsson and Mr Sheikha, is a factor.

"I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary," the Uber chief executive wrote in his email to staff.

Likewise, Mr Sheikha was quoted on Tuesday: "We could not have found a better partner than Uber under Dara's leadership".

The ability of the combination to accelerate growth for Careem beyond simply access to more funding was also a significant driver for the deal. The company could have continued to raise money to fund its expansion and in October had secured a further $200m in capital from existing investors including Al Tayyar, Kingdom Holding, Rakuten and STV. Instead it chose to do a deal with Uber as the most strategic course.

With governments across the region looking to nurture start-ups in the technology space, the size of the Uber-Careem deal, as well as the increased availability of expertise and liquidity in its wake, will be seen as a catalyst for both budding entrepreneurs and investors, from inside and outside the Middle East.

Careem will become a wholly-owned but independent subsidiary of Uber.

Email sent to Uber team from chief executive Dara Khosrowshahi From: Dara To: Team@ Date: March 25, 2019 at 11:45pm PT Subj: Accelerating in the Middle East Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year. Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers. I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region. This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build. It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber. Uber on, Dara