India’s one of the leading food delivery platform Zomato has today announced the acquisition of UberEats’ business in India in an all-stock deal. While the company has not revealed the value of this transaction, report indicates that acquisition of Uber’s food delivery business is at around $350 million.
As a part of this deal, Uber will now get around 9.9 percent stake in Zomato. Also, UberEats, which operates in 41 cities, will now redirect its customers to Zomato. The deal comes days after Zomato raised $150 million funding from existing investor Ant Financial, valuing the company at $3 billion.
While delivery partners associated with UberEats India will on-board Zomato’s fleet, around 245 employees of UberEats will be affected by this deal as they will not be absorbed by Zomato as part of the transaction. However, it is being said that Uber is trying to find ways to absorb them within its business.
With Uber Eats, Zomato will now collectively have a 55 percent share of the food delivery market in India and compete largely with homegrown Swiggy. Zomato currently delivers to over 550 cities across the nation.
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The move to sell UberEats India, which had been in works since months, is aimed at cutting losses at the ride hailing company’s food delivery business that has been a drag on the company’s earnings.
UberEats entered the Indian market in 2017 and scaled business to 41 cities with over 65,000 riders who deliver food from 26,000 restaurant partners. The company, which was once seen as a major competitor to Zomato and Swiggy, started struggling in India’s hyper-competitive market.
With the sale of the food business in India, Uber can now focus on the rides business and driving it towards profitability. Besides cutting losses in India, Uber is now taking a stake in a startup that was valued at $3 billion earlier this month.
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