Uber said on Tuesday it has sold its food delivery business, Uber Eats, in India to local rival Zomato as the American ride-hailing giant races to shed lossmaking operations to become profitable by next year.
As part of the deal, Uber would own 9.99% of Zomato and its Eats users would become part of the Indian company, the two loss-making firms said. The deal valued Uber Eats’ India business between $300 million and $350 million, a person familiar with the matter told TechCrunch.
TechCrunch reported last month that the two were in advanced stages of talks for a deal. Indian newspaper Times of India first signaled about the two companies’ talks in November.
Satish Meena, an analyst at Forrester, told TechCrunch that despite the Uber deal, Zomato still lags Prosus Ventures -backed Swiggy, which services more number of orders each day.
“Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication,” said Dara Khosrowshahi, chief executive of Uber, in a statement. Uber Eats, which entered India in 2017, initiated conversations to sell the local business in late 2018, said people familiar with the matter.
“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,” he added.
According to industry estimates, Uber is not the “clear category leader” in India. That title belongs to Ola, which processes twice as many rides as Uber in India and has presence in 110 cities, compared to Uber’s roughly three-dozen.
The announcement comes amidst of Zomato’s new financing round. The 11-year-old Indian firm last month raised $150 million from Ant Financial and is looking to secure another $400 million in the next few weeks.