Indian startup market woke up to a surprising deal between Zomato and Uber Eats India where the latter was acquired by Zomato. Though either of the companies did not share the deal size, sources floating in the media pegged it was about $300-$350 million.
Zomato CEO Deepinder Goyal announced the acquisition of Uber India’s food delivery business in an all-stock deal. As per the deal, Zomato gets a share of 90% of share in Uber India’s food delivery business and Uber gets an ownership of 9.99%.
According to the sources, it is said that U.S.-listed cab aggregator’s effort to sell of Uber India stock was to cut back the loss in food segment globally.
Following this acquisition, Uber Eats will discontinue its operations, delivery partners, and direct restaurants and its users to Zomato, effective Tuesday.
Uber Eats India is now Zomato. Here's to better food for more people, and new beginnings.
— Deepinder Goyal (@deepigoyal) January 21, 2020
“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 tweeted.
Uber launched its food delivery segment in 2017 in India and had about 26,000 restaurant partners and gained about 12% of the food delivery market. It was competing with the top two contenders in the segment – Zomato and Swiggy.
This deal comes after Zomato raising $150 million in funding from its existing investor Ant Financial, an affiliate from Alibaba at a $3 billion valuation.
By choosing to almost stay away from food delivery segment, it is said that Uber would now focus entirely on its rides business and expansion to tier 2 cities.