Uber in advanced talks to buy Careem for $3 billion

Companies may announce a cash-and-shares deal valuing the Dubai-based company at about $3 billion in coming weeks

Dubai-based Careem is often heralded as a start-up success story globally. Reuters

Uber is in advanced discussions to buy its Dubai-based rival Careem, a deal that would expand the ride-hailing giant’s operations in the Middle East, according to people familiar with the matter.

The companies may announce a cash-and-shares transaction that values Careem at about $3 billion (Dh11bn) in the coming weeks, the people said, asking not to be identified because the talks are private.

Negotiations are ongoing and no final agreements have been reached, the people said. Representatives for the companies declined to comment.

San Francisco-based Uber is emphasizing growth, investing aggressively in food delivery, logistics, electric bikes and self-driving cars, as it prepares for a potential initial public offering this year. 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.

Careem, whose backers include Saudi Prince Alwaleed bin Talal’s investment firm and Japanese e-commerce giant Rakuten, was valued at about $1 billion in a 2016 funding round, making it one of the most valuable technology startups in the Middle East. The company has more than a million drivers and operates in more than 100 cities in the Middle East, according to its website.

Acquiring a rival would be a departure in strategy for Uber. The company has traditionally used such deals to offload costly overseas operations and take stakes in competitors, as it did in China, Russia and Southeast Asia.

A deal would signal Uber’s commitment to the Middle East, where one of its biggest investors, a Saudi Arabian sovereign wealth fund overseen by Crown Prince Mohammed bin Salman, is based. It would also form an alliance with the biggest backers of its main competitor at home, Lyft. Rakuten holds more than 10 per cent of Lyft, which is expected to hold its own IPO in the coming months.