UberEats Called Off India Business After Capturing 9.99% Share from Zomato
Uber Technologies Inc has sold its loss-making online food-ordering business in India, Uber Eats, to Zomato in exchange for a 9.99 per cent stake in the Indian food ordering 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 Tuesday, the two companies said.
Started in 2017, Uber’s food-delivery business in India has lagged market leaders Nasper-based Swiggy and Jack Ma’s Ant Financial-backed Zomato. Another player Foodpanda, which was acquired in 2017 by ANI Technologies Ltd that also owns ride-hailing app Ola, too struggled to consolidate its user base.
“We have acquired Uber Eats India and with this development, we are the undisputed market leaders in the food delivery category in India,” Zomato founder Deepinder Goyal wrote in a blog. “Through this deal, Uber Eats India users now become Zomato users.”
Zomato is a restaurant review, restaurant discovery, food delivery and dining out transactions platform that provides information for over 1.5 million restaurants across 24 countries and serves more than 70 million users every month.
Goyal, who is also the CEO of Zomato, said: “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.”
Dara Khosrowshahi, CEO of Uber, said India remains “an exceptionally important market” to Uber and the firm will continue to invest in growing local rides business.
“We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner,” he said. “Our Uber Eats team in India has achieved an incredible amount over the last two years.”
Zomato’s orders per month may go up by as much as 10 million to 50 million after the deal.
The deal marks possible consolidation in the highly competitive and price-sensitive online food delivery market where most players are in the red.
In a regulatory filing to the BSE, Info Edge (India) – a lead shareholder of Zomato and owner of Naukri.com brand – said its shareholding in the food delivery startup will stand reduced to about 22.71 per cent upon closing of the transaction.
The deal comes days after Zomato had raised USD 150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a USD 3 billion valuation.
Post money valuation of Zomato is USD 3.55 billion, sources in the know of the matter told PTI, adding that this transaction will add to a total of over 50 million orders per month on its platform, giving it around 55 per cent market share.
On accessing the Uber Eats app, users were shown a message saying they can still use Uber Eats if they are traveling outside India.
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 Rs 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 per cent of the global gross bookings but accounted for over 25 per cent 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 sources said.
They also said that 245 full-time employees of Uber Eats will be affected and some of these people could be absorbed in other roles in Uber.