Online food delivery and restaurant finder startup Zomato announced the acquisition of US-giant Uber’s food delivery business UberEats India for around $350 million. The all-stock deal gives Uber a 10% stake in Alibaba Ant Financial-backed firm Zomato.
The acquisition implies that the Uber Eats executive jobs in Bangalore and other cities will either be laid off or be reallocated to Uber’s other verticals. Uber Eats India will be ceasing its operations in the country and directing the registered restaurants, delivery partners, and users platform to Zomato.
Uber Eats India tweeted, “We entered food delivery in India in 2017, and today is when our journey takes a different route. Zomato has acquired Uber Eats in India, and we’ll no longer be available here with immediate effect. We wish all our users more good times with great food on the road ahead.”
End of a Journey, Start of an Era
The 2017 launched platform by ride-hailing giant Uber had nearly 26,000 registered restaurant partners, along with sharing a 12% share in the market, according to sources. The company held a tough competition with Zomato and Swiggy in the food delivery segment.
According to reports by ET, the combined equity of Zomato & Uber Eats India is expected to garner a market share of over 50-55%, thrusting it ahead of Swiggy in the food-delivery segment post-acquisition.
Note: Post-acquisition, Uber India plans to work on Tier 2 city expansion, focussing on its rides business, according to sources.
Uber Eats held a stronger foothold compared to Zomato in parts of Tamil Nadu, with an aggregated 30% market share, according to an Uber executive. The acquisition will, therefore, assist Zomato in reaching out to the micro-markets like the ones in Tamil Nadu.
Here’s happened in Uber Eats India in the last one year:
- Failed acquisition deal with Swiggy
- Cash allocation halved to $90-120 million
- Operating loss of Rs 2,197 crore in food delivery space for five months through Dec’19
Earlier, Zomato raised a $150 million funding from China ecommerce giant Alibaba’s subsidiary Ant Financial. The latest funding round of Zomato, part of a $600 million funding round announced by Zomato CEO Deepinder, brings up the current value of the food-tech startup at over $3 billion.