The deal valued around $200 million
On Tuesday Uber announced that it has sold Uber Eats to Zomato. Uber, the US ride-sharing behemoth decided to let go of its food delivery unit to make for the losses. As it is planning to be more profitable in the coming years it has decided to concentrate on its on-demand taxi service.
The deal will give 9.99% equity of Zomato to Uber and Uber Eats will come directly under Zomato. Both the companies are suffering losses; the deal was valued between $160-200 million as it was told by the sources. Both the companies advanced further in previous months towards a concrete deal. The talks were in the air since November last year.
In a statement Dara Khosrowshahi, Chief Executive of Uber said, “our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t prouder of their ingenuity and dedication. 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.”
Stiff competition in the food delivery market
The statement was somehow self-proclaimed as Uber is not the top company in the ride-hailing category. The rival Ola is the one who is ruling the Indian on-demand taxi service market as it operates around 110 cities in India. The employees of the Uber Eats can join the parent company and some might get cut in the process.
The new acquisition might help Zomato to gain ground in the Indian market as it is getting stiff competition from Swiggy and other food delivery platforms. The global loss suffered by the company is around $1 billion for the last quarter.