Uber has reached a deal to acquire ride-hailing competitor Careem for $3.1 billion, the companies announced Tuesday. Dubai-based Careem, founded in 2012, claims more than 30 million registered users and sells car-hailing services in 120 cities across North Africa, the Middle East and South Asia, from Morocco to Pakistan. The companies characterized the deal as the biggest-ever technology industry transaction in the greater Middle East. You can read CEO Dara Khosrowshahi's email to staff explaining the decision to buy Careem here. The announcement comes as Uber approaches a much-anticipated initial public offering that reports have said could value the company at as much as $120 billion. It is expected to be one of the biggest tech IPOs in history.

The Careem Networks FZ ride-hailing app is displayed on an Apple Inc. iPhone 8 in this arranged photograph outside the Mall of the Emirates in Dubai, United Arab Emirates, on Sunday, Oct. 7, 2018. Careem last month acquired Indian bus shuttle service app Commut as the Dubai-based ride-hailing firm expands into mass transport. Photographer: Christopher Pike/Bloomberg via Getty Images Christopher Pike | Bloomberg | Getty Images

The acquisition, which remains subject to regulatory approval, consists of $1.7 billion in convertible notes and $1.4 billion in cash. It is expected to close in the first quarter of 2020, the companies said. 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," Khosrowshahi said in a statement. He added that the combined company will "deliver exceptional outcomes for riders, drivers, and cities, in this fast-moving part of the world." Careem co-founder and CEO Mudassir Sheikha will stay on to lead the Careem business, the companies said. Careem and Uber will continue to operate as independent brands.

Investing in Middle East after Asia pullback

Uber is unprofitable, booking a $1.8 billion loss in 2018. Ahead of its blockbuster IPO, the company is pitching itself as a one-stop shop for transportation and logistics, not just taxi-hailing. The firm's last big acquisition deal saw it buy U.S. bike-sharing firm Jump.