Uber Eats ‘redirected’ to Zomato for $350 million and close to 10% shareholding

The exit from the business for Uber Eats can result in annualised savings of nearly $750 million

Zomato, Uber eats, Food delivery, Acquisition

Uber Eats, the food delivery business run by Uber, the US-based ride-hailing company, was taken over by online food delivery and restaurant discovery platform Zomato. This acquisition happened for around $350 million (Rs 2,485 crore).

The all-stock transaction will give Uber Eats about 10% shareholding in Gurgaon-based Zomato which is now expected to be the market leader and is valued at $3 billion. This underlines the U.S.-listed cab aggregator’s effort to cut back on loss-making business segments globally. Uber Eats will cease to exist as a separate brand locally and will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective Tuesday.

Uber Technologies Inc's food delivery business Uber Eats struggled to take off in India after launching in 2017. The main reason for this is because Zomato and other local rival Swiggy dominated the food delivery market in India. The exit from the business for Uber Eats can result in annualised savings of nearly $750 million, numbers from a regulatory filing last year suggest.

Deepinder Goyal, Chief Executive Officer (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 that Uber Eats team in India has achieved an incredible amount over the last two years. "India remains an exceptionally important market to Uber and we will continue to invest in growing our rides business, which is already the clear category leader," Mr Khosrowshahi said, adding, "We have been very impressed by Zomato's ability to grow rapidly in a capital-efficient manner and we wish them continued success."

The acquisition of Uber Eats in India catapults Zomato into a small list of Indian startups that have bought out foreign competitors, but for Uber, the practice of conceding to local companies isn’t new. The transportation company has already sold operations in China, South East Asia and West Asia to local competitors and the sale of Uber Eats in India to Alibaba-backed Zomato adds to a long list of divestitures the company has made post its disappointing public offering last year.

Uber Eats will remain active in Bangladesh and Sri Lanka, as per reports.

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