Uber Technologies Inc. has announced that Zomato has acquired Uber eats in India. The move was followed by the motive to cut back the losses incurred by the giant's operations globally.
According to a New York Times report, Uber will unship the business in return for 9.9% of the Indian startup, maintaining a foothold in one of the world’s fastest-growing internet arenas. Zomato, which CB Insights valued at $2.2 billion, confirmed the sale in a blog post-Tuesday but didn’t specify details of the transaction.
The deal marks a wave of consolidation in the food delivery sector. Uber, operating below its IPO price, attempts to dispose of off its loss-making operations to head towards its goal of being profitable startup on an EBITDA basis by 2021. While Uber cabs continue to compete with ola cabs in ride-hailing, departing from the food business can help the profitability.
Uber Eats started its food delivery services in India in 2017 and took a giant leap in the competitive market. However, the sudden inclination gradually started resulting in degradation of the startup in the food processing market. Uber Eats, offering exciting bargain offers to its consumers failed to keep pace with its resources and pitted against competitors with powerful investors.
Bangalore-based Swiggy and Zomato, backed by Jack Ma’s Ant Financial, now lead India’s food-delivery sector, signalling consolidation shakes the other units like Foodpanda. Foodpanda, acquired by Ola in 2017 faces a stormy struggle against the two leading giants.
“The competition in this space is going to continue to be intense, and the food delivery category is still very small compared to the overall foodservice market in India.," Zomato founder Deepinder Goyal said in the post. He further assured Uber Eats consumers in India that they'll be able to enjoy exciting offers tailored by Zomato and their experience won’t be compromised in any way.