Ride-hailing giant Uber is in talks over a possible merger with Middle East rival Careem, according to Bloomberg — citing three people familiar with the matter.
The report suggests various deal structures have been discussed, although it also says that no deal has been reached — nor may ever be reached, as discussions are ongoing and may not come to anything.
Bloomberg’s sources told it that Uber has said it would need to own more than half of the combined company, if not buy Careem outright.
Among the possible arrangements that have been discussed are for Careem’s current leaders to manage a new combined business, day to day, with potentially both brands being retained in local markets.
Another proposal would have Uber outright acquire Careem.
Bloomberg also reports that Dubai-based Careem is in talks with investors to raise $500 million, which it says could value the ride-hailing company at about $1.5BN. Careem is said to have held early talks with banks about a potential IPO in January.
Neither company has publicly confirmed any talks.
An Uber spokesman declined to comment when asked to confirm or deny talks with Careem.
While a Careem spokeswoman, Maha Abouelenein, told us: “We do not comment on rumors. Our focus remains to build the leading internet platform for the region, from the region. That means expanding to new markets and doubling down on our existing markets by adding new products and services to the platform. We are only getting started.”
Uber has been reconfiguring its global business for several years now, pulling out of South East Asia earlier this year after agreeing to sell its business to local rival Grab — while also taking a minority stake in the competitor.
And Uber did a similar exit deal with another rival — Didi — in China back in 2016.
Last year it also threw its lot in with Yandex.Taxi in Russia, with the pair combining efforts via a joint venture — albeit one which gave Yandex the majority share.
But Uber has been talking up its position and potential in the Middle East — with CEO Dara Khosrowshahi telling a conference in May that he believes it can be the “winning player” in the market, as well as in India and Africa, and vowing it would “control our own destiny” in those markets.
That does not necessary take a Careem-Uber deal off the table, of course, though the (public) claim from Uber is that it’s not willing to settle for a minority stake in the region, as it has elsewhere.
Responding in April to a question from CNBC about whether it might acquire Careem, Uber’s COO Barney Harford ruled out doing any more transactions for minority stakes, saying: “It would be crazy for us as a hypergrowth company to not engage in conversations about potential partnerships. But we’ve been very clear, the markets that we remain in today are core markets for us.”
Harford also claimed Uber was positioned to be able to invest in its chosen growth markets on “an indefinite basis”, thanks to having reached profitability in other markets. It’s also targeting 2019 for an IPO.
In March the Financial Times reported that Uber was in talks with Indian rival Ola over another possible merger — and the newspaper’s sources poured cold water on the notion of Uber taking a minority stake there too.
Of course Uber may not want to have to shrink its already retrenched global ambitions. But it may have to if it gets out-competed in its chosen plum markets.
Hence Careem’s chest-puffing talk about just getting started — provided it can convince its investors to screw their courage to the sticking place and stay on board for the ride.
Investors in Careem, which closed a $500M Series E round a year ago at a $1BN+ valuation, include Saudi-based VC Kingdom Holding, German automaker Daimler, and Japanese tech giant Rakuten — which reportedly led the Series E.
Oskar Mielczarek de la Miel, a managing partner at Rakuten Capital who leads on its mobility investments and is also a Careem board member, declined to comment on the rumors of Uber-Careem merger talks when we asked to chat.
But he was happy to talk up the broader opportunity that investors seen coming down the road for ridesharing, telling us: “If you look at the industry everyone is talking to everyone, and while consolidation is an obvious trend, it won’t be limited to the ridesharing players but draw other tech companies, OEMs and payment companies, to name a few.”
According to Careem’s website, the ride-hailing firm operates in 15 countries, mostly (but not only) across the Middle East, offering its services in around 80 cities in all.
While Uber’s website lists it being active in 15 cities in the Middle East and 15 in Africa.