Indian food aggregator Zomato has acquired Uber’s food delivery business in India in an all-stock transaction that would give Uber a 9.99% ownership in Zomato. The development would reportedly value Uber’s stake in Zomato at $300 million, as per CNBC. Zomato claimed that this development makes them the “undisputed market leader”, Uber states that they will continue to invest in the ride-hailing business which is “already the clear category leader”. Zomato and Uber were reported to have been in talks for the acquisition in November 2019, for an asking price of Rs 500 million, as Times of India had reported then.
Uber Eats is set to discontinue operations, effective today and would direct users of their apps to the Zomato platform. Uber Eats’ delivery partners will now join Zomato’s fleet, according to the Zomato statement. Zomato now competes with Naspers-backed Swiggy and Ola-backed Foodpanda.
As per CNBC, Uber is “under pressure from investors to turn its business around”. Last year, the company recorded a loss of $5.2 billion in its second-quarter and laid off around 350 employees. This latest development is being seen as an attempt at cutting losses. Uber Eats had also shut down its operations in South Korea in September 2019. Uber had gone public last year where it raised more than $8 billion. However, the IPO did not perform as well as many had expected it to.
India’s competitive food delivery market
Zomato is backed by Ant Financial (Alibaba Affiliate) and has a pre-money valuation of $3 billion. Ant-Fin had pumped another $150 million dollars into the company, this month.
- In October 208, Zomato had raised $210 million from Alibaba’s payments arm Ant Financial (Alipay Singapore).
- In September 2018, Zomato had acquired corporate food aggregator TongueStun for $18 million.
- In June 2018, Swiggy raised $210 million from Naspers and investor DST Global.