US-headquartered on-demand ride provider Uber has begun preliminary discussions to merge its Middle Eastern business with that of United Arab Emirates-based competitor Careem, Bloomberg reported today.
The nature of the proposed deal has not yet been decided, three people familiar with the matter told Bloomberg, but Uber, which has conducted similar transactions in China, Russia and Southeast Asia, wants a majority stake of the combined company.
Founded in 2012, Careem runs an app-based ride hailing service that is present in more than 100 cities across 14 countries in the Middle East, North Africa and South Asia, in comparison to the 30 cities in the Middle East and Africa in which Uber operates.
Uber has already struck deals that involved it exchanging local operations for equity stakes in China-based Didi Chuxing, Russia and Eastern Europe-based Yandex Taxi and Southeast Asia-based Grab.
One possible route to a deal would involve Careem’s management overseeing both brands’ operations, while another would involve a full acquisition by Uber, the sources said.
Careem had received more than $570m in funding before Didi Chuxing invested an undisclosed amount in the company in August 2017, and is reportedly in the process of raising up to $500m more in a round that will value it at up to $1.5bn.
The company had previously closed a $500m round in June 2017 featuring e-commerce firm Rakuten, automotive manufacturer Daimler, telecommunications company Saudi Telecom and travel agency Al Tayyar.
Kingdom Holding, DCM Ventures, Coatue Management, Abraaj Group, Beco Capital, Lumia Capital and Wamda Capital also participated in the 2017 round, which followed a $60m series C in 2015 backed by Saudi Telecom, Al Tayyar, Abraaj, Beco, Lumia, Wamda and Impulse.
Al Tayaar and Saudi Telecom had already participated in Careem’s $10m series B round in 2014, the year after the latter had provided $1.7m of funding.