Uber sold its food delivery business in India to local rival Zomato
Ride-hailing giant announced Tuesday that it sold its food delivery business in India to its rival Zomato in an all-stock deal. The transaction brings Uber a 9.99% stake in the Indian restaurant aggregator and food delivery start-up.
Uber Eats is now Zomato
Zomato is sponsored by Alibaba’s China-based affiliate Ant Financial, which recently shown its intent to invest to up to about $150 million at a pre-money valuation of around $3 billion, as revealed by official filings from Zomato-shareholder Info Edge.
Based on that valuation, Uber’s share in Zomato would be worth roughly $300 million. Uber claimed to comment on the deal’s value.
Uber East has confirmed that it will discontinue operations starting Tuesday and that it will forward restaurants, delivery partners and consumers to the Zomato app.
“India remains an outstandingly important market to Uber, and we will look forward to investing in raising our local Rides business, which has been clear category leader,” said Dara Khosrowshahi, CEO Uber.
The tech firm remained under pressure from investors to turn its operations around. Last year, the company disclosed a $5.2 billion loss in its second-quarter earnings and expelled hundreds of employees during 2019.
Uber will keep competing in the Indian ride-hailing market versus the start-up Ola. Previously, Uber left the ground in Southeast Asia and China to local players Grab and Didi Chuxing respectively and exited its Eats business in South Korea.
Online food delivery market in India
With Asia become the largest market for online food delivery globally, revenues topped $45 billion in 2018 and predicted to go over $100 billion by the end of 2025, as said a report from Frost & Sullivan.
China kept the largest percentage of that market share at around 73%, with India stood second at 13.2%.
The acquisition of Uber Eats is expected to bolster Zomato’s presence against its chief competitor, Swiggy. The latter is sponsored by Naspers and has tech behemoth Tencent and China’s Meituan Dianping as investors. Both firms have raised millions of dollars in capitals, and they’re burning cash offering steep discounts to consumers in a bid to cover more market share.
Zomato – in its first-half report for fiscal 2020 – revealed that its burn rate went down to 60% compared to six months earlier. It didn’t provide more details.
Revenue totaled at $205 million, growing from $63 million in the same period a year earlier.
Local reports described Swiggy’s parent company, Bundl Technologies, testified a six-fold escalation in losses for the fiscal year that ended in March 2019.