Uber Drops $3.1 Billion to Buy Middle Eastern Competitor
Why compete when you can just buy 'em? - Uber (not really).
March 26, 2019
Uber announced that it would be buying Careem, a Middle-Eastern ride-sharing company that competes (well, competed) directly with Uber, for $3.1 Billion. The deal includes $1.4 Billion in cash and $1.7 Billion in convertible notes.
If you read that and thought to yourself, "what the hell is a convertible note?" don't feel bad, a lot of people probably did.
To get an idea of how convertible notes work, imagine Uber handing Careem a piece of paper with "We ain't got it right now but hold on to this, you know we good for it" written on it. That same note will eventually be able to be converted to around 30.9 million shares valued at $55 each (totaling the $1.7 billion).
Uber was having trouble competing in the Middle East with more local companies like Careem, so instead of fighting an uphill battle, they just bought them. Big bank take lil' bank.
It'll be interesting to see if they keep this same strategy going in other regions where they're having a bit of trouble winning market share, like China and Russia.