Uber sells India food delivery biz for a 10% stake in Zomato

After months of speculation, food delivery and restaurant discovery platform Zomato has acquired ride hailing app Uber’s food delivery business in India, Uber Eats. The all-stock deal gives Uber a 9.99% ownership in Ant Financial backed Zomato. 

In its latest round, when it raised $150 million from Ant Financial, Zomato was valued at $3 billion. 

According to earlier reports, this will also see a round of funding from Uber in Zomato, bringing it up to speed with close rival Swiggy.

With effect from today, Uber Eats users, restaurants and delivery partners will be moved to the Zomato platform. In a blog post, Deepinder Goyal, CEO of Zomato said, “We have acquired Uber Eats India and with this development, we are the undisputed market leaders in the food delivery category in India.”

An email sent to users on the Uber Eats platform read, “As such, you will no longer be able to order from Uber Eats in India, but you will be able to enjoy your favourite meals with exciting offers tailored for you on Zomato.And you can still use Uber Eats if you're traveling outside India.” The combined entity will be serving over 550 cities across India.

Uber’s food delivery business in India was valued at $104 million according to regulatory filings in 2019. The US headquartered company has also shifted its ride-hailing and food delivery business in India to a locally registered entity, Uber India Systems in early November.

“India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader. We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success,”  Dara Khosrowshahi, CEO at Uber, said in a statement. 

Talks around a potential acquisition by Zomato were first reported in November, two years after Uber entered the food delivery space in India. Uber Eats India head Bhavik Rathod resigned from his role in October, along with head of central operations Deepak Reddy.

This is the first major acquisition in India’s food delivery space, which has seen players like Ola venturing into the business through acquisition of Foodpanda and then closing down delivery operations to focus on the cloud-kitchen model. Budget hospitality chain OYO had also launched its cloud kitchen model a year ago, which now faces the axe as the company has adopted cost-cutting measures and has laid off nearly 2400 employees across roles.