Business Essentials for Professionals


Uber’s Food Delivery Business In India Sold To Its Domestic Rival

Uber’s Food Delivery Business In India Sold To Its Domestic Rival
In its efforts to divest its loss making business operations and turn profitable by next year, the United States based ride hailing company Uber has sold out its food delivery business Uber East in India to its local rival Zomato.
About 10 per cent of Zomato would be owned by Uber Eats as a part of the deal while its user base will become users of the Indian company, both the companies said. Incidentally Zomato is also a loss making startup.  According to sources quoted in the media, the valuation of Uber Eats in India was valued in the deal between $160 million and $200 million.
There were reports last month that had stated that the tow companies were in an advanced stage of negotiations on the deal. 
Even with the deal, the Indian firm Zomato will be second in the Indian food delivery market to another domestic firm Swiggy in terms of the number of orders delivered each day, said Satish Meena, an analyst at Forrester. In late 2018, $1 billion was raised by Swiggy which is backed by Prosus Ventures.
“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 chief executive of Uber Dara Khosrowshahi in a statement.
According to reports, negotiations with Zomato were initiated by Uber Eats in late 2018. Uber had entered the Indian food delivery business in 2017.
“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.
Uber is not the “clear category leader” in the Indian ride hailing business according to industry estimates as it lags behind its Indian rival Ola. The Indian ride hailing company is present in 110 cities in India compared to just about three dozen cities in India where Uber operates while Ola also processes twice as many rides as Uber in India.
According to reports, following the deal, the employees of Uber Eats in India have been given the option of joining Uber while some have been asked to let go.
This deal comes at a time after Zomato completed a successful funding round. According to reports, Zomato – which was founded 11 years ago, raised $150 million from Ant Financial last month. The company has reportedly said that it aims to raise another $400 million in the next few weeks.
Uber had exited the Southeast Asia last year and analysts believe that the sale of Uber Eats in India will help the company to reduce global losses. A quarterly loss of more than $1 billion was reported by the company in November after it had cuts hundreds of jobs last year. The company also reported a loss of $5.2 billion in the previous quarter. It has announced a target of becoming profitable by 2021.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc