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The companies have discussed a number of potential deal structures, but an agreement has yet to be reached, according to three people close to the matter.

In one potential deal structure, Careem's leaders would manage the new combined business day-to-day while keeping one of both of the companies' local brands. Another proposal sees Uber fully acquiring Careem.

A spokesman for Uber declined to comment. Spokeswoman at Careem, Maha Abouelenein declined to comment on the talks, adding in a statement the company is "only getting started" on its expansion plans, with an ambition to "build a lasting institution for the region". 

Uber Chief Executive Officer Dara Khosrowshahi said at a conference in May that he believed Uber would come out on top in India, the Middle East and Africa. "We are going to be, I believe, the winning player in those markets and we’re going to control our own destiny," Khosrowshahi said.

Meanwhile, Dubai-based Careem, founded in 2012, is in talks with investors to raise $500 million, potentially valuing the company at $1.5 billion. 

The ride-hailing apps have proved popular with customers in the Middle East, however Careem has faced bans in Jordan and Egypt, with taxi drivers complaining that both companies enjoy unfair advantages as they neither pay the same taxes nor follow comparable licensing procedures.