Food delivery startup Zomato on Tuesday (January 21) said it has acquired the Indian business of Uber Eats in an all-stock deal that will give Uber a 9.99 percent stake in the restaurant discovery platform.
Uber Eats in India will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective from Tuesday, a statement said.
In a regulatory filing to BSE, Info Edge (India) – a shareholder in Zomato – said its shareholding in Zomato will stand reduced to about 22.71 percent on fully converted and the diluted basis upon closing of the transaction.
The deal comes days after Zomato had raised $150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a $3 billion valuation.
“We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category,” Zomato CEO Deepinder Goyal said.
Uber Eats, which entered India in 2017, has about 26,000 restaurants listed on its platform from 41 cities.
Zomato’s restaurant discovery and food delivery platform has information for over 1.5 million restaurants across 24 countries and serves more than 70 million users every month.
Discussions between Zomato and Uber have been on for months. Facing stiff competition from Zomato and Swiggy, Uber Eats had been making losses.
Uber had projected an operating loss of ₹2,197 crore in its food delivery business for the five months through December 2019, according to a valuation report prepared by KPMG affiliate BSR and was part of regulatory filings.
According to sources, Uber Eats India business contributed three percent of the global gross bookings but accounted for over 25 percent of adjusted EBIDTA losses for the first three quarters of 2019.
With the sale of the food business in India, Uber can now focus on the rides business and driving it towards profitability, one of the persons said.
“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,” Dara Khosrowshahi, CEO of Uber, said in the statement.
(With inputs from agencies)