Ride-hailing giant Uber is planning to merge with its competition in the Middle East, though unlike prior deals in Southeast Asia, China and Russia, it says it will remain in control of the merged entity.
Bloomberg reports that Uber is in “preliminary talks” with local competitor Careem to strike a deal that would see the two companies merge.
According to three sources who talked to the site, Uber plans to control more than half of the resulting company, though it is possible that it will simply delegate day-to-day management to Careem executives:
A spokesman for Uber declined to comment.
Under one proposed arrangement, Careem’s current leaders would manage the new combined business on a day-to-day basis while retaining one or both of the companies’ local brands, the people said.
Another proposal would have Uber acquire Careem. The people also said that discussions have been ongoing and may not result in a deal.
Careem competes in “more than 70 cities across at least 10 countries from North Africa to Pakistan,” Bloomberg wrote, and has achieved significant or leading market shares in most.
Per CNN, Careem recently began hiring female drivers in Saudi Arabia after a ban on women driving cars expired in June 2018 — a segment of the population Uber has also been trying to recruit.
Careem also has a presence in Turkey, where Uber has run into hostility from national leaders. It is said to be closing in on a $US1.5 billion ($2 billion) valuation.
Uber is streamlining its international operations before a make-or-break initial public offering in 2019. The company continues to haemorrhage billions of dollars a year and has lost massive portions of its value since 2015 as rivals have sprung up like crazy.
As US News noted in February, bailing on battles to the death with local competitors and instead selling out its market share in exchange for equity is one way Uber has tried to stabilise its financials.
Uber bailed on its Southeast Asian division so fast, selling out its share of the market to competitor Grab, that infuriated regional regulators accused it of having created an illegal monopoly.
According to Bloomberg, Uber CEO Dara Khosrowshahi said in May that he believed Uber was competitive in India, the Middle East and Africa, and would ultimately be “the winning player in those markets and we’re going to control our own destiny”.