Business

Zomato Acquires Uber Eats In All-Stock Deal

As reported before, Zomato has finally acquired Uber Eats’ food delivery business in India for $350 Mn, the Indian food delivery giant has announced. Uber Eats’ will continue to remain a separate brand. However, customers will be automatically redirected to Zomato, giving the Indian food aggregator access to almost 50-55% of the market.

Uber will get a 9.9 percent stake in Zomato as part of the deal whose size has not been disclosed. The deal for Uber Eats, which operates in 41 cities, was signed at 3 am, and its customers will be shifted to the Zomato app from 7 am.
The deal is applicable only in India and Uber Eats will continue to operate in Bangladesh and Sri Lanka. According to sources the deal value is around $300- 350 million.

“We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category,” said Deepinder Goyal, CEO of Zomato.

The deal between Zomato and Uber Eats was reportedly in the works for over a year. The execution of the move marks a big step in the big food delivery industry in the country, currently led by Zomato and competitor Swiggy. In a somewhat similar move, cab-service Ola bought Foodpanda from its German parent company Delivery Hero. However, Ola hasn’t really impacted the industry with the deal since.

The Uber Eats buyout was reportedly helped by Zomato’s latest fundraising which was led by Ant Financial. The Alibaba-affiliate boosted Zomato with $150 million at a $3 billion valuation. On the other hand, Uber wasn’t doing very well with the food-delivery business. The company had projected an operating loss of Rs 2,197 crore in its food delivery business for five months through December. Uber had also mentioned in its quarterly results announcement that the food-delivery business had been a drag for the company.

Now, with Zomato acquiring Uber Eats, the market share of food delivery is likely to tilt in Zomato’s favor. Also getting the customer-base of both apps now, Zomato could enjoy a 50-55 percent market share in the industry post the deal. Hence, the deal not only gets Zomato an edge over rivals Swiggy but also reduces competition for it.

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