According to Bloomberg, Uber Technologies Inc. and Careem Networks FZ are in preliminary talks to combine their Middle Eastern ride-hailing services. According to people familiar with the matter, the merger hopes to solve a costly rivalry as both companies prepare for their each individual public offering. The companies have brought to the table multiple potential deal structures but have been unable to both agree upon one, however details are rare since the talks have been private.
Uber is not a stranger to merger talks. The ride-hailing giant has sold their operations in Southeast Asia, Russia and China for large stakes in their competition in those areas in order to remove escalating rivalries. Uber and Yandex NV merged their Russian business last year. In March, Uber merged with Grab Holdings for 27.5 percent stake in the Southeast Asia region. However, in their discussions with Careem, Uber has insisted they must own more than half of the combined company, if not buy Careem outright. This is the first time in a merger talk where Uber insisted on a controlling share of the merged company. Spokespersons for both companies have declined to comment. Maha Abouelenein, spokesperson for Careem only said in a statement that the company is "only getting started" on its expansion plans.
Uber's insistence on owning majority control of the merged companies is their belief that they will come out on top in India, the Middle East and Africa. Uber Chief Executive Officer Dara Khosrowshahi quoted, "we are going to be, I believe, the winning player in those markets and we're going to control our own destiny." The ride-hailing giant has been preparing for its initial public offering (IPO) set for 2019. Careem, the local favorite, has been reported to be in talks with investors to raise $500 million, which potentially values the company at about $1.5 billion. The Dubai-based company has also been reported to have held early talks with banks about a potential IPO in January. Careem currently operates in more than 70 cities across 10 countries from North Africa to Pakistan and has been outperforming Uber in most of them.