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Zomato acquires Uber Eats for Rs 2,485 crore; over 100 employees face uncertainty

While Swiggy is little ahead of Zomato in the food delivery space, Uber Eats coming onboard with Zomato will surely give it more firepower to stake on Swiggy as the new entity will automatically capture 50-55% market in food delivery business

twitter-logo BusinessToday.In   New Delhi     Last Updated: January 21, 2020  | 10:39 IST
Zomato acquires Uber Eats for Rs 2,485 crore; over 100 employees face uncertainty
As per the deal, Uber gets around 10 per cent stake in Zomato.

Alibaba's Ant Financial-backed online food delivery and restaurant discovery platform Zomato has acquired Uber Eats, the food delivery business of ride-hailing giant Uber India for around Rs 2,485 crore ($350 million) in an all-stock deal. The deal gives the ride-hailing app a 10 per cent stake in Zomato. Notably, Zomato will not absorb Uber Eat employees, which means they will either be absorbed in Uber's other verticals or could face lay-off. There's little clarity on their future roles right now.

The entire deal is worth around $350 million, The Economic Times newspaper reported quoting sources.

The deal is an attractive one for Zomato that has been looking to crack Swiggy's stronghold in the southern states. Uber Eats will seize to exist as a separate Uber brand in India now and all its customers will be automatically redirected to Zomato's app. While Swiggy is little ahead of Zomato in the food delivery space right now, Uber Eats coming onboard with Zomato will surely give more firepower to take on Swiggy, and the combined entity will capture around 50-55 per cent market share.

When it comes to the Indian food delivery market, UberEats is a distant third in comparison to its rivals Zomato and Swiggy that clock around 2-2.5 million orders every day. On the other hand, UberEats only clocks 2,50,000-3,00,000 orders per day. As for the value of the order, on an average UberEats witnesses $2 per order as compared to $3-4 per order for Swiggy and Zomato.

"With our expansion to 550+ cities over the last year, our continued focus on user experience and our commitment to operating excellence, we have demonstrated our ability to execute on a variety of parameters," Zomato said in a statement.

Zomato founder Deepinder Goyal said Uber Eats India users would 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.  With Zomato, you'll realise that we share a common love for great food," he said.

Uber, on the other hand, that saw a lacklustre IPO in May this year, had been struggling to sustain its food delivery business in India. Commenting on the development, Dara Khosrowshahi, CEO of Uber, said India remained an exceptionally important market to Uber and the company would continue to invest in growing local rides business. "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. We have been very impressed by Zomato's ability to grow rapidly in a capital-efficient manner and we wish them continued success."

Zomato has operations across 24 countries and serves more than 70 million users every month.

Also read: Zomato to raise $150 million from investor Ant Financial at $3 billion valuation

Edited by Manoj Sharma

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