Zomato eats into Uber, acquires food business in India

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Uber, which is aiming to turn profitable by 2021, had launched Uber Eats in India in 2017, and has about 26,000 restaurants listed on the platform across 41 cities.

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 diluted basis upon closing of the transaction.

Zomato cofounder and CEO, Deepinder Goyal, also confirmed that the acquisition significantly strengthens Zomato's position in the category. Bloomberg reported that the deal was valued at $172 million.

Moreover, select UberEats users will be getting some impressive offers from Zomato as well, including 50% off on the first 3 orders, along with a free 3 month subscription to Zomato Gold. The latest round of funding in Zomato, which now values the company at over $3 billion, is part of $600 million funding round announced by Zomato CEO Deepinder Goyal at a Delhi event in December. Zomato, too, has been reducing its burn rate. The domestic rivals together control roughly 80% of the food delivery market in India, Wedbush said.

"This category will continue to grow and get built over the next couple of decades, as we work hand-in-hand with restaurants and food service providers to [deliver] better food to more people". Uber Eats bled a lot of money previous year. While Uber tried to rely on massive discounts and deals to bring in customers, it could never garner the market share that Zomato and Swiggy enjoyed in the market. The acquisition will reportedly allow Uber a 9.99 per cent stake in Zomato.

A statement released by Uber Eats today reads: "We have announced today that Zomato has acquired Uber Eats in India".

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Swiggy had told TOI last month that it has a 60% gross sales market share in the food delivery market. For the last five months of December, Uber projected negative revenue of Rs 762.5 crore in Uber Eats India.

The platform will continue its core business of ride-sharing in India, where it competes with ANI Technologies Inc.'s Ola.

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Dara Khosrowshahi, CEO of Uber, said that Uber Eats team in India has achieved an incredible amount over the last two years. "For Uber, the deal means redefining competence", independent brand consultant Harish Bijoor said. Since then, it has grown as a stand-alone app available in 220 plus cities around the globe.

In fact, Uber had held talks with Swiggy in 2019 for sale of Uber Eats India, but talks fell through due to mismatch in valuations, as per reports.

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