After shying away from some overseas markets, Uber said Tuesday it will expand in the Middle East region by buying ride-sharing rival Careem for $3.1 billion.

The acquisition, the largest-ever for Uber, will enable the company “to pull back from a costly battle over market share [with Careem] and significantly widen its presence in a region of some 400 million” people, many of whom are “embracing smartphone apps to manage their lives,” The Wall Street Journal said.

Careem operates in major Middle East markets including Egypt, Jordan, Pakistan, Saudi Arabia, and the United Arab Emirates.

Uber will pay $1.7 billion in convertible notes and $1.4 billion for the company. Last fall, when Careem raised a $200 million tranche of funding, the business was reported to be valued at around $2 billion.

“This is an important moment for Uber as we continue to expand the strength of our platform around the world,” Uber CEO Dara Khosrowshahi said in a news release, noting that Careem has “played a key role in shaping the future of urban mobility across the Middle East.”

As the WSJ reports, Uber had retreated from several other international markets in recent years where it faced hefty competition, including China, Russia, and Southeast Asia. But the company is now gearing up for an initial public offering and combining with Careem “could help [it] trim its losses.”

For the fourth quarter, Uber reported $3 billion in revenue with net losses of $865 million.

TechCrunch noted that Uber is facing legal challenges and critical scrutiny from policymakers in Western markets while the Middle East offers “‘lighter touch’ regulation and blistering temperatures which naturally favor air conditioned transportation.”

The region “is arguably as close as it gets to perfect market conditions for ride-hailing generally, and therefore perhaps offers a more reliable demand base for Uber,” TechCrunch said.

Careem’s investors include Saudi Prince al-Waleed Bin Talal, Daimler AG, and Japanese e-retailer Rokuten. It will operate under its own brand as a subsidiary of Uber and continue to be led by CEO and co-founder Mudassir Sheikha.

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