Uber is selling its money-losing food delivery service in India to rival Zomato for a 9.99% business stake, according to reports on Tuesday, January 21.
The rideshare giant also recently dumped ventures in Russia, China, and Southeast Asia to keep its promise to get rid of money-losers and turn a profit.
The Zomato deal valued Uber Eats India between US$160 million and US$200 million, two sources told reporters.
Forrester analyst Satish Meena told reporters that even with the Uber deal, Zomato’s local competitor Swiggy has a bigger cut of India’s food delivery business.
Zomato, founded in 2008, was valued at US$3.55 billion earlier this month, The New York Times reported.
“India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business,” Uber CEO Dara Khosrowshahi said in a statement.
Uber’s biggest ride-hailing competitor in India is Ola. There wasn’t much collaboration between Uber’s Indian food delivery business handled with cars.
“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.
Zomato services over 1.5 million restaurants in 24 countries and serves in excess of 70 million users every month.
“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 food service market in India,” Goyal wrote on the company’s blog. “Through this deal, Uber Eats India users now become Zomato users. I want to assure Uber Eats India users that their user experience won’t be compromised in any way — if at all, the scale gives us higher density to make our deliveries faster.”
Zomato and Swiggy have roughly 80% of India’s food delivery market. The Uber deal gives Zomato another 10 million orders, tipping it marginally ahead of Swiggy and moving more solidly in its territory in southern India.
In February, Uber was reportedly planning to sell its India food delivery business to Swiggy in exchange for a 10% stake. The deal never closed.