The food delivery giant Zomato acquired UberEats India operations, the food delivery business that Uber was running. The deal closed at a whopping $350 million. Zomato will give a 10% share to the ride-hailing giant Uber. But Zomato will not absorb the team of UberEats in India. After the acquisition, the combined entity of Zomato and UberEats is expected to corner the 50-55% market in terms of orders, pulling it ahead of Swiggy. Now the customers will be directly redirected to Zomato when they will open UberEats. It is expected that 90% of the UberEats users will transition to Zomato.
For Zomato it will surely be a great move to step up ahead of its rival Swiggy. Also, there will be one competition less for the company. In parts of Tamil Nadu, Madhya Pradesh, and Kerela, UberEats has a stronger foot-hold than Zomato with a 30% market share, so it will definitely be good for Zomato.
Recently, Alibaba affiliate Ant Financial, which is the existing investor of Zomato and pumped in $150 Million at a $3 Billion valuation. This buyout came from the back of this fundraising.
Uber has underperformed in the market after going public last year; the business was among the low priority ones because of its cash burn of around $20 Million per month in India. Last year, Uber, in its quarterly results announcement, said that the Indian food delivery industry had been a drag for it. According to regulatory disclosures made in India, Uber had projected an operating loss of Rs 2,197 crore in its food delivery business for the five months through December 2019.
For the last year, UberEats has been on a block. In February last year, Uber came close to selling the business to Swiggy, but due to some reasons, the deal fell off. Uber entered the food industry in 2017 when Zomato and Swiggy had already acquired a place in the market. Uber opted strategy of giving discounts and offers to acquire and retain customers. It acquired a place in some small towns and cities, but the two giants kept on fighting for the leadership of the market.