Uber Eats to get 9.99% Ownership in Zomato
Leading food delivery and restaurant aggregation platform, Zomato has recently announced that it has acquired Uber Eats’ business in India in an all-stock deal. Uber’s food delivery business will be directed to Zomato by this deal. Zomato has agreed to give Uber 9.99% ownership in Zomato. The operations of Uber Eats in India will be discontinued and users on its platform will be redirected to Zomato’s app. Uber aims to cut its losses in the food delivery business in India by this move. Around 245 employees of the ride-hailing company will be affected by this deal as they will not be absorbed by Zomato as part of the transaction.
The Much Anticipated Deal
“The acquisition significantly strengthens our position in the category,” said Deepinder Goyal, founder and CEO of Zomato. With this deal, Zomato will now have 55% collective share of the food delivery market in India and will compete with homegrown Swiggy. With widespread speculation over Uber’s decision to completely exist food delivery business in India, this deal was on the cards. The ride-hailing company took this decision as a response to increasing pressures on it to curb losses. This move hails Uber’s strategy to either be a dominant player in markets it operates or to exit the business.
Uber to Focus on its Transport Business
Competing with its rival Ola, Uber will continue to focus on its ride-hailing business in India. “India remains an exceptionally important market for Uber, and we will continue to invest in growing our local Rides business which is already the clear category leader,” said Dara Khosrowshahi, CEO of Uber. “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. We have been impressed by Zomato’s ability to grow rapidly in a capital-efficient manner,” he further added. Yet another round of consolidation in India’s thriving food delivery business where companies backed by large investors have struggled to find sustainable business models is marked by this deal.
