Uber sells its India food delivery business to Zomato in all-stock deal

Uber announced on Tuesday the sale of its food delivery business in India to Zomato in a stock exchange deal.

Uber will obtain a 9.9 percent stake in Zomato under the agreement the size of which has not been disclosed. The agreement for Uber Eats, which operates in 41 cities, was signed at 3am, and its customers will go to the Zomato application starting at 7am.'

The agreement is only applicable in India and Uber Eats will continue to operate in Bangladesh and Sri Lanka. According to sources, the deal's value is around $ 300 to 350 million.

Sources say the measure is part of Uber's strategy of being number one or two in each of its businesses in all countries that operate. In India, Uber Eats has grown very rapidly to a 12% share of the food delivery market. However, while India accounted for 3 percent of Uber Eats' global gross reserve, it also accounted for 25 percent of EBITDA's global losses for the business segment. Strong competition in the Indian food delivery market has prevented India Uber Eats from taking first or second positions, which are with Zomato and Swiggy.

“We are proud to have pioneered the discovery of restaurants and created a leading food delivery company in over 500 cities in India. This acquisition significantly strengthens our position in the category, "said Zomato CEO Deepinder Goyal. The measure to double in India will help Uber Inc improve Uber Eats' finances.

“India remains an extremely important market for Uber and we will continue to invest in the growth of our local Walks business, which is already the category leader. We were very impressed with Zomato's ability to grow rapidly efficiently in terms of capital and we hope they will continue to be successful, "said Dara Khosrowshahi, CEO of Uber.

Uber is focusing on making its taxi transportation business in India profitable and will expand its network within the country from 50 cities to 200 cities this year. The movement is expected to push Zomato into the upper slot in this space, pushing Swiggy down.

Around 245 Uber Eats employees will be affected by the deal. However, sources in Uber India say they will be on the payroll until March 3 and that the company is doing all it can to absorb some and support others to find work.