BENGALURU: Ride-hailing giant Uber has quit its online food delivery business in India and sold its vertical Uber Eats to Zomato for $300 million in an all-stocks deal. Uber was in talks with the two leading online food delivery companies, Swiggy and Zomato for quite sometime to sell its food tech arm that has been incurring more losses than its cab-riding services.
The deal shaped up after a fresh infusion of $150 million by Alibaba-backed Ant Financial in the recent funding round that raised the valuation of Zomato to $3 billion. Interestingly, Zomato bought Uber Eats at three times its valuation that stood at $104 million, according to the regulatory filings.
The deal will result in Uber acquiring nearly 10 per cent stake in Zomato with the combined entity likely to gain a 50-55 per cent share in the hyper-competitive online food delivery business in India. The transaction will enable Zomato to consolidate its presence across southern states like Kerala, Tamil Nadu where Uber Eats had nearly 30 per cent market share.
After the deal, all Uber Eats subscribers and users will be re-directed to Zomato app, although the fate of nearly 100 employees working with Uber Eats remains hazy. “We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across over 500 cities in India. This acquisition significantly strengthens our position in the category,” said Deepinder Goyal, founder and CEO, Zomato.
According to sources, Uber may participate in the next fundraising round for Zomato and may leverage the latter’s market consolidation in the segment to take on Swiggy, which has been dominating the industry till now. Uber, which has been struggling with its loss-making entities globally, had earlier indicated that it is in the process of shutting down a few units, including its food delivery unit in India which was incurring double the loss than its primary ride-hailing service.
Uber may participate in next funding round
Uber may participate in the next fundraising round for Zomato and may leverage the latter’s market consolidation in the segment to take on Swiggy, which has been dominating the industry till now