Back in July, news broke out that Uber was considering the acquisition of 50% or more of Middle East competitor Careem, ahead of a planned IPO in 2019.
Now, the $62 billion ride-hailing company is having continued discussions with Careem regarding an acquisition, Bloomberg reported after hearing from people familiar with the matter.
What started off as an interesting development that had arisen out of the fierce rivalry between the two companies, seems to be picking up steam as a possible eventuality as Uber persists in its offer.
Careem sees the benefits of a merger, but do shareholders do as well?
Earlier this year, media reports put Careem at around $1.5 billion.
Now, the new info from these sources forecasts a boost in the company’s valuation, putting it at around $2-$2.5 billion.
It seems that Careem management is on board with such a deal was it to happen. The sources explained that management was, in fact, trying to convince shareholders of the potential benefits for the company if they were to merge with their competitors. No decisions have been made as of yet.
A deal might be looking more likely, but nothing could come out of it in the end.
“We believe the consumer internet opportunity in the region is massive and untapped,” Careem said in an emailed statement to Bloomberg. “In the last couple of years, the rest of the world has begun to embrace this opportunity and we have been approached by multiple strategic and financial investors. Our ambition remains to build a lasting tech institution from the region.”
All of Uber’s actions are in anticipation of its planned IPO
The aforementioned IPO means Uber needs to have all its pieces in check and in position, and with a large market such as the MENA region, Uber needs to make sure it knows where it stands with customers.
Uber has been slimming down its businesses outside its core markets as it prepares for its own public offering. Last year, Uber and Yandex NV agreed to merge their ride-hailing businesses in Russia, Bloomberg reports. In March, Uber agreed to swap its business in Southeast Asia for a 27.5% stake in Singapore-based rival Grab Holdings Inc.
It seems that Uber is realizing that they can’t afford to downscale or lose out on market share anymore if they hope for the IPO to go through as smoothly as possible.