Uber Technologies Inc. is in discussions to buy its Dubai-based rival Careem Networks FZ as the ride-hailing giant expands in the Middle East, people familiar with the matter said.
A deal could value Careem at $2 billion to $2.5 billion, the people said, asking not to be identified because the talks are private. Negotiations are ongoing and Careem’s management is working to convince the firm’s shareholders of the merits of a deal, the people said. No final decisions have been made, and the companies may decide against the transaction, they said.
“We believe the consumer internet opportunity in the region is massive and untapped,” Careem said in an emailed statement. “In the last couple of years, the rest of the world has begun to embrace this opportunity and we have been approached by multiple strategic and financial investors. Our ambition remains to build a lasting tech institution from the region.”
A spokesman for Uber declined to comment.
Uber and Careem held preliminary talks in July to combine their Middle Eastern ride-hailing services, hoping to resolve a costly rivalry in the region, people familiar with the matter said at the time. Uber had said it wanted to own more than half of the combined company and had also discussed buying Careem outright at the time, the people said.
A deal with Uber could head off a potential initial public offering. Careem had held talks with investors earlier this year to raise $500 million, potentially valuing the firm at about $1.5 billion ahead of a possible listing, people familiar with the matter said in May. The company, whose backers include Japanese e-commerce giant Rakuten Inc. and German automaker Daimler AG, was valued at a little more than $1 billion in a 2016 funding round, making it one of the most valuable technology startups in the Middle East.
Uber Chief Executive Officer Dara Khosrowshahi said at a conference in May that he believed the company would come out on top in India, the Middle East and Africa. "We are going to be, I believe, the winning player in those markets and we’re going to control our own destiny," he said.
Careem has more than a million drivers and operates in more than 100 cities in the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Lebanon, Pakistan, Kuwait, Egypt, Morocco, Jordan, Turkey, Palestine, Iraq and Sudan, according to its website. The app lets customers book rides on cars, bikes, golf carts, boats and rickshaws as well as schedule deliveries.