What's going on?
Ride-hailing behemoth Uber is reportedly in talks to buy its Middle Eastern counterpart and competitor, Careem (tweet this).
What does this mean?
Founded in Dubai in 2012 as a web-based service for corporate car bookings, Careem’s now the leading ride-hailing company in the Middle East, North Africa, Pakistan and Turkey. As well as its negotiations with Uber, the company’s also hustling to raise another $500 million – on top of the $500 million that it’s already raised, potentially valuing it at $1.5 billion. Cruisin’.
One of Uber’s (and its competitors’) biggest costs is marketing – to entice both riders and drivers onto its platform. If it buys out the competition in the Middle East, it’ll be able to slash those marketing costs.
Why should I care?
The bigger picture: Uber’s been selling off body parts left, right and center.
Most notably, Uber sold its Chinese operations to worthy opponent DiDi in 2016 – after losing $2 billion in China in two years – and took a significant stake in the company in return. It may make sense for the top two ride-hailing firms in a region to join forces and stop wasting time and money competing with each other. Uber’s also sold its business in Southeast Asia and merged its operations in Russia.
For markets: Uber might be cleaning house in order to “go public”.
Uber’s set to launch an initial public offering (IPO) in 2019, meaning investors will be able to buy and sell its shares on the stock market. It’s likely looking to spruce up its numbers beforehand by selling off its businesses in regions where it’s losing money, since it burned through $4.5 billion in 2017. So far this year it’s on track to do just that, lowering its losses and continuing to grow its sales. Potential investors will want this positive trend to continue in order to have confidence that there’ll be profits coming out of Uber at some point in the future.