The deal would help to grow Uber’s operations in the region. The companies could announce a cash-and-shares deal that values Careem at about $3 billion.
The companies entered talks in July of last year in hopes of resolving what could be a costly rivalry in the area. Negotiations are ongoing and there are no concrete agreements. Meanwhile, Uber is investing heavily in other ventures like food delivery, electric bikes and self-driving cars while it prepares for an IPO this year.
Careem has upwards of one million drivers and operates in more than 100 cities in the region. It has backers that include Saudi Prince Al-Waleed bin Talal’s investment firm and Japanese eCommerce company Rakuten.
The company doesn’t usually buy rivals, and generally offloads expensive overseas ventures and takes stakes in competitors. The move would show that the company is committed to the Middle East, where a Saudi Arabian sovereign wealth fund run by Crown Prince Mohammed bin Salman is located.
The move is also strategic because it would form an alliance with Rakuten, which has a 10 percent stake in Lyft, which is planning its own IPO this year.
A report in January said that Uber’s valuation when it goes public is likely to be $14 billion less than its most recent private valuation.
According to The Information, it is believed that when the ride-hailing company goes public this year, it will have a valuation of a little less than $90 billion. That number is partially based on previous undisclosed projections that the company handed over to creditors last year, which revealed estimated double net revenue would reach $14.2 billion by 2019. It also said Uber’s loss before interest, taxes and non-cash items would fall to $500 million in 2019 from a projected $1.7 billion in 2018.