San Francisco-based Uber Technologies Inc. and Dubai-based Careem Networks FZ are in preliminary talks to combine their Middle Eastern ride-hailing services, according to reports, in a merger that would create one dominant presence in the market and avoid a potentially costly rivalry.
Bloomberg reports that the two companies have discussed a potential merger but the companies have only discussed a number of potential deal structures, and “haven’t come to an agreement on the contours,” citing unidentified sources. Those sources told Bloomberg that, in its discussions with Careem, Uber has said that it would need to own more than half of the combined company, if not buy Careem outright, according to the people familiar with the talks.
Saudi Arabia’s Public Investment Fund (PIF) bought a 5 percent stake in Uber for $3.5 billion in 2016, representing the largest investment in the company from a single buyer to date.
In 2016, Careem raised $350 million led by Japanese e-commerce firm Rakuten and Saudi Telecom Company (STC). Careem is currently in talks with investors to raise another round of funding, this time as much as $500 million, potentially valuing the Dubai-based ride-hailing company at about $1.5 billion, Bloomberg reports.
Ride-sharing apps have found a significant market size in car-dominated Saudi Arabia, which just recently enacted new rules to allow women to drive.