Uber Technologies and Careem Networks are holding preliminary negotiations to combine their ride-hailing services in the Middle East, with the hope of resolving a rivalry that has been costly for both as Uber begins preparations for next year’s public offering, said three sources familiar with this situation.
The two companies discussed several potential structures for a deal, but have not reached an agreement on everything said the three sources, who requested anonymity due to the talks being private.
Uber sold operations it had in China, Southeast Asia and Russia, and has insisted that it would not be selling off more of its global business on a piecemeal basis.
In its talks with Careem, Uber said that it needs to own over 50% of a combined entity, if not acquire Careem outright, said the people aware of the negotiations.
An Uber spokesperson would not comment. Maha Abouelenein, a Careem spokeswoman, declined comment when asked to do so.
Under one arrangement that has been proposed, Careem’s current top executives would be the management team for the new entity on a daily basis, while keeping one or both of the local brands.
Another arrangement that has been discussed is have Uber buy Careem. The sources insisted that the two companies have not reached any final agreement and that in the end a deal may not be reached.
Careem, which is a popular favorite of locals, is in talks with investors for $500 million in funding, potentially valuing the company, which is based in Dubai, at $1.5 billion. Careem is in early talks with different banks about a possible January IPO.
Uber CEO Dara Khosrowshahi while at a conference during May said he believed that Uber would be the winner in India, Africa and the Middle East.
Uber has slimmed down its businesses outside core markets it has established as it makes preparations for its own 2019 IPO.
In 2017, Uber agreed to merge with Yandex in Russia. This past March, Uber agreed it would swap its Southeast Asia business for a stake of 27.5% in Grab Holdings its rival based in Singapore.
Careem has operations in over 70 cities in 10 countries from North Africa to Pakistan. Its largest market is Saudi Arabia, where rival Uber is pushing to sign female drivers to use the change in law allowing females to drive, as an advantage.