On Monday, Bloomberg reported that Uber is in talks to acquire Careem, its principal rival in the Middle East. The report said the Dubai-based ride-hailing service could command a $2 billion to $2.5 billion price tag.
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Bloomberg reported that the two companies were discussing a merger as far back as July of this year. At the time, the Bloomberg article said, “Uber had said it wanted to own more than half of the combined company and had also discussed buying Careem outright at the time.”
In late August, the two companies denied signing an acquisition agreement, following a formal inquiry by the Egyptian Competition Authority. That regulatory body is concerned that the merger would be anti-competitive and ultimately harm consumers.
As of early September, Careem had reached 1 million drivers spread across fourteen countries, according to coverage in Forbes Middle East.
In February 2018, Careem acquired RoundMenu, an app for listing restaurants and ordering food, for an undisclosed sum. In July, the company announced it would raise and spend $150 million to launch a food delivery business that competes with Uber’s own Uber Eats platform.
To date, the company has raised at least $571 million in known venture funding from investors ranging from strategic players like Daimler and Rakuten to well-connected competitors like Chinese ride-hailing giant Didi Chuxing. Other investors include Middle Eastern venture firms Wamda Capital and Abraaj Capital, as well as the sovereign wealth funds of Saudi Arabia and Kuwait.
At this point, as Bloomberg reports, the deal could put the kibosh on calls for Careem to go public, and it could slow down Uber’s IPO push, too.
As Crunchbase News showed in its report on Uber’s Q2 2018 financials, the company might have some extra cash left over from its sale of its Southeast Asian unit to Grab. But the American on-demand transportation giant is still torching lots of money amid a temporary shift in focus from car-hailing to for-hire electric scooters and battery-assisted bikes domestically and internationally.
That being said, the “will they or won’t they” gossip about these two companies has gone on long enough that they will, in all likelihood, tie the corporate knot one day. As the cost of competition ramps up in the ride-hailing sector, consolidation marches on.
Illustration: Li-Anne Dias