Zomato buys Uber’s food delivery business in India

On Tuesday, Uber declared that it has sold ‘Uber Eats’, its food delivery business in India to local competitor Zomato. The American ride-providing giant made the move races to cut loss-making operations and become profitable by next year.

About the Deal

According to the deal, Uber is going to own 9.99% of Zomato and its ‘Uber Eats’ users would become part of the Indian company, both the loss-making firms stated. TechCrunch reported that two people familiar with the matter have said that the deal valued Uber Eats’ India business between $160 million and $200 million.

Last month it was reported by TechCrunch that both the firms were in advanced stages of talks for a deal. Times of India, an Indian newspaper first hinted about the two companies’ talks in November.

An analyst at Forrester, Satish Meena, explained that despite the Uber deal, Zomato still lags behind Prosus Ventures-backed Swiggy, which delivers more number of orders each day.

Dara Khosrowshahi, chief executive of Uber said in a statement, “Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication.” 

 According to some people who know about the matter, Uber Eats began its services in India in 2017, however, in late 2018 it started the talks to sell the local business.

“India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader. We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success,” Khosrowshahi added.

The wish to transform into a profitable firm

As per the industry estimates, it is evident that Uber fails to be the “clear category leader” in India. The title is possessed by Ola, which completes twice as many rides as Uber in India. Moreover, it has a presence in 110 cities, whereas Uber is roughly present in three-dozen.

The question arises what will happen to employees of Uber Eats in India, some of them have been given the chance to join Uber while rest will be let go, TechCrunch reported.

The news surfaces amidst of Zomato’s latest financing round. The Indian firm which is 11-year-old, last month Ant Financial helped the company in raising $150 million and now it is hoping to secure another $400 million in the next few weeks.

Shedding Uber Eats India would be beneficial for Uber, which last year also left Southeast Asia. The offloading is going to reduce its global losses. The company reported a quarterly loss of more than $1 billion in November, due to which it had to let go of hundreds of employees. In the previous quarter, it registered a loss of about $5.2 billion. Uber stated that it aims to transform into a profitable firm by 2021.

The ride-hailing giant estimated a loss of $107.5 million for its food delivery business in India for the time between August and December of last year. Zomato has also been decreasing its burn rate. As of 2018, Zomato was reportedly losing more than $40 million each month. However, it has reduced its monthly loss to $20 million, according to Info Edge, one of the investors in Zomato.

Hello, I’m Anna Yeo. If you like my news coverage, please drop a good word in my inbox. I’m journalist by profession and have been part of many major reporting across the globe. I like to write crisp and factual news. I have completed my masters degree in journalism. Feel free to contact me at [email protected]

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