Uber is set to buy its Middle Eastern rival Careem for $3.1 billion, financial news agency Bloomberg reported on Sunday. Two sources familiar with the deal confirmed the same to Reuters.

The deal, expected to be announced on Tuesday, will see Uber pay $1.4 billion in cash and the rest in notes convertible to Uber shares, Bloomberg reported, citing people with knowledge of the matter.

It comes as Uber prepares for its initial public offering — expected next month — which could, according to some estimates, see the rideshare giant's value increase to $100 billion.

Careem declined to comment while Uber did not immediately respond to a request from Reuters to comment.

Dubai-based Careem boasts more than a million drivers and 30 million users across 90 cities.

Uber Technologies Inc, a US-based global logistics and transportation company, has been seeking new avenues of growth even as it faces severe competition in its core business of ride hailing from rivals like Lyft Inc.

The IPOs of Lyft and Uber represent a watershed for Silicon Valley's technology unicorns, which for years have snubbed the stock market in favour of raising capital privately, with investors happy to back their frothy valuations.