Uber acquires careem - Afrikan Heroes

Uber Acquires Careem Group’s Operation in Egypt

December 30, 2019

Egypt and Uber has entered an agreement for the acquisition of Careem, a ride-hailing firm that has operated in Egypt since 2014. The agreement on Uber Technologies Inc.’s acquisition of Careem Inc came with clauses that sets price caps and other measures designed to keep the local market competitive.

The decision was made after studying data on 270 million trips as well as Egyptian and international precedents, the Egyptian Competition Authority said Sunday in a statement.A

Amongthe commitments the authority placed on the acquisition contract is that any raising of passenger prices has to comply with cap imposed by the ECA.

Also a cap was placed on pricing such that surgepricing, wherein rides temporarily become more expensive due to increased demand, will be limited to 2.5 times the normal trip cost. While companies won’t increase the commission they deduct from drivers beyond current rate.

It was also agreed that the r growth of new competitors will be encouraged by allowing them access to Uber’s mapping and trip data, plus letting them obtain user data from Uber and Careem applications, after obtaining users’ consent

Uber in March announced its $3.1 billion purchase of its Dubai-based competitor Careem. Both companies have operated in Egypt since 2014, with their services in the Arab world’s most populous nation including app-hailed passenger vehicles, buses and deliveries.

Analysts see this as a new strategy by Uber to acquire competitors especially in Africa.

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Egypt ’s Competition Authority Finally Approves Uber ’s Acquisition of Careem, Although With Conditions

Egypt ’s ride-sharing space is undoubtedly going to be hotly contested in 2020. It seems like Uber Egypt just got its new year gift. Egypt’s competition authority has gone ahead to approve the deal breaker. The Uber’s $3.1 billion acquisition of regional rival Careem, announced in March, 2019, has now been sealed, subject however, to regional approval from similar competition authority across, although there is huge price tag to it. As part of its concession to the approval, Uber would still have to meet a set of commitments meant to reduce harm to competitors.

“We welcome the decision by the Egyptian Competition Authority (ECA) to approve Uber’s pending acquisition of Careem,” a spokesman for Uber said. “Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across Egypt.”

Here Is The Deal

The deal is expected to close in January, depending on regulatory approval in various territories of which Egypt is among the most significant. Egypt, with a booming population seen swelling to 100 million, is the biggest in the Middle East for ridehailing services.
Under a series of commitments Uber has made to the ECA, the San Francisco-headquartered company has agreed to abandon exclusivity provisions with partners and intermediaries and reduce barriers to entry into the market.
An independent monitoring trustee will be nominated by Uber and approved by the ECA to ensure adherence to the commitments. Uber will share random samples of trip data with the trustee monthly to ensure compliance.

The commitments must be adhered to for five years from the date the transaction closes, or when one or more ride-hailing providers achieves 20% of weekly rides individually or 30% collectively in overlapping areas excluding Cairo and Alexandria, Egypt’s biggest cities.
Excluding surge pricing and promotions, Uber will cap its yearly fare increases beyond inflationary costs at 10% for Uber X and Careem GO, the most popular services in Egypt.
Surge pricing, a mechanism that raises prices when demand far exceeds supply, will also be capped on Uber X and Careem GO at 2.5 times. Surge prices will be applied to a maximum of 30% of annual trips on the two services.

A Quick Look At How The Acquisition Started

The Careem acquisition was announced in March after more than nine months of stop-start talks between the two companies, handing Uber a much-needed victory after a series of overseas divestments.
Careem will become a wholly owned subsidiary of Uber but will continue to operate as an independent brand with independent management.

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