Uber pledges commitments to Egyptian regulators to gain approval for its $3.1 billion acquisition of Careem

on Dec 29, 2019
Updated: Mar 11, 2020
Listen
  • Uber agrees to a few commitments to gain ECA's approval for its $3.1 billion acquisition of Careem.
  • Careem to become Uber's wholly owned subsidiary but with independent management and operations.
  • Uber committed to minimizing barriers for the competitors to enter the market and abandon exclusivity provisions.
  • ECA will approve an independent monitoring trustee announced by Uber to ensure compliance with the commitments.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

Uber has received the approval from the Egyptian regulators for its acquisition of Careem for $3.1 billion. As per the sources, the American ride-hailing service proposed a few commitments that ensured minimal damage to competitors in order to receive the regulator’s approval for acquiring its regional rival.

Uber’s acquisition of Careem in Egypt was originally announced in March. The two competitors negotiated for over nine months before Uber opted for foreign divestments that saw it victorious in finalizing the acquisition.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Egyptian Approval Marks The Most Significant In Uber’s Quest To Acquire Careem In 2020

Copy link to section

According to the report, Uber is expected to sign the deal with Careem in January 2020. However, approval from different regulatory bodies from a range of territories (Egypt being the most significant) is required before a broader deal can be closed.

Following the acquisition, Careem will turn into Uber’s wholly own subsidiary. As per the agreement, however, Careem will continue to have an independent management and will be independent in its operations.

Uber’s commitments pledged to the Egyptian Competition Authority (ECA) include its efforts to minimize barriers for competitors in entering the market, in light of which, the U.S company also announced that exclusivity provisions will be abandoned.

Uber also stated that it will be announcing an independent trustee for monitoring and ensuring the company’s adherence to the pledged commitments. ECA, it added, will have the authority to approve the trustee. Following appointment, Uber will be liable to submitting random trip data samples to the trustee on a monthly basis that will ensure compliance.

Uber To Adhere To The Commitments For 5 Years

Copy link to section

The agreement also highlights a period of five years (after the deal is closed) for which Uber has to adhere to the commitments. Alternatively, the company has to adhere unless a competitor achieves the 20% mark in weekly rides or multiple rivals collectively hit the 30% weekly mark in areas excluding the largest Egyptian cities of Alexandria and Cairo.

Being the most widely used services in Egypt, Uber will have to commit to keeping the annual fare increases in Careem GO and Uber X services capped at 10% above the inflationary costs. This doesn’t include promotions and surge pricing.

Surge pricing is known to increase the fare in times when service’s supply falls short of its demand. Uber will also have to cap the surge pricing at 2.5 times for Careem GO and Uber X during the period of agreement with the ECA. The company will also be required to confine surge pricing to not more than 30% of the Careem Go and Uber X annual trips.

Ad

Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
Stock Market