Uber said on Tuesday it has sold its food delivery business, Uber Eats, in India to local rival Zomato as the American ride-hailing giant races to shed lossmaking operations to become profitable by next year.
In an all-stock deal, valued anywhere between $300-$500 million, the former will gain a 9.99 percent stake in Zomato.
The deal, which gives Uber 9.99% ownership in Zomato, underlines the US -listed cab aggregator's effort to cut back on loss-making business segments globally. "Until then, we hope you will enjoy many more tasty moments and discover great restaurants around you on Zomato", Uber Eats told its India customers in an email.
Zomato cofounder and CEO, Deepinder Goyal, also confirmed that the acquisition significantly strengthens Zomato's position in the category. We have been very impressed by Zomato's ability to grow rapidly in a capital-efficient manner and we wish them continued success, " said Dara Khosrowshahi, CEO of Uber. While last year was about the dominance battle between Bengaluru-based foodtech unicorn Swiggy and Zomato, it seems like we will see a repeat of the same this year.
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There is no denying the value the online food delivery platforms have brought to these restaurants.
TOI was the first to report in its November 25 edition that UberEats India is back on the block and Zomato is the frontrunner to acquire it. Uber is not expected to make an investment in Zomato as a part of its ongoing round immediately, nor will it be getting a board seat.
The entire deal is worth around $350 million, The Economic Times newspaper reported quoting sources.
The deal comes close on the heels of Zomato raising $150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a $3 billion valuation. It provides in-depth information on over 1.5 million restaurants across 24 countries and serves more than 70 million users every month. This deal will not only help Uber offload some of its losses but also give Zomato a slight edge over Swiggy-the current market leader in terms of daily order count. In February 2019, Uber Eats was said to be in talks with Swiggy. On the other hand, UberEats only clocks 2,50,000-3,00,000 orders per day.