UberEats’ India business acquired by local rival Zomato

Uber sold Uber Eats, the ride-hailing company’s food delivery arm, to rival Zomato today in India. In an all-stock deal,  valued anywhere between $300-$500 million, the former will gain a 9.99 percent stake in Zomato.

Zomato’s co-founder and CEO, Deepinder Goyal, said the company will onboard all Uber Eats customers, restaurant partners, and driver-partners on its own platform:

Through this deal, Uber Eats India users now become Zomato users. I want to assure Uber Eats India users that their Similarly, the delivery partners who were earlier associated with Uber Eats India will be on-boarded on our fleet user experience won’t be compromised in any way – if at all, the scale gives us higher density to make our deliveries faster.

[Read: Amazon is reportedly launching a food delivery service in India to rival Zomato and Swiggy]

Uber’s CEO, Dara Khosrowshahi, said the company is proud of the Uber Eats team’s achievement in India, but it sounds like nothing more than lip service. Uber Eats bled a lot of money last year.

People familiar with the matter told Financial Times that the service’s operations in India only represented 3 percent of Uber’s food business revenue globally, but contributed to 25 percent losses in 2019 — almost $500 million a year. The deal also aligns with Uber’s plan to cut down losses and become profitable by 2021.

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Reports suggest that Swiggy currently leads Zomato in the food delivery market. With the Uber Eats acquisition, the latter will hope to gain some momentum this year.