Uber Technologies Inc will sell Uber Eats in India to local rival Zomato in a $172 million deal, according to a person familiar with the transaction, underscoring the ride-hailing giant\u2019s effort to cut back on loss-making operations.<\/p>\n
Uber agreed to offload the business in return for 9.99% of the Indian startup, maintaining a foothold in one of the world\u2019s fastest-growing internet arenas, the companies said in a statement.<\/p>\n
As part of the deal, the US company will shutter operations but direct all restaurants, delivery companies and diners to Zomato.<\/p>\n
Neither company offered up financial details but the person said the value of the Zomato shares Uber gets is estimated at about $172 million \u2014 the Indian startup was last\u00a0valued<\/a>\u00a0at $2.2 billion.<\/p>\n The deal marks yet another leg in a wave of consolidation sweeping the food delivery sector.<\/p>\n Uber, which is trading well below its IPO price, seeks to\u00a0hive off<\/span>\u00a0loss-making operations to achieve its\u00a0goal<\/a>\u00a0of being profitable on an EBITDA basis by 2021.<\/p>\n While it will continue to vie with Ola \u2014 also backed by SoftBank Group Corp \u2014 in ride-hailing, exiting the food business can help staunch bleeding in one of the most competitive markets in the region.<\/p>\n SoftBank founder Masayoshi Son has impressed upon the companies within his massive portfolio the need to curtail excess and focus on the bottom line.<\/p>\n \u201cThe 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,\u201d Zomato founder Deepinder Goyal said in a\u00a0blogpost<\/a>.<\/p>\n \u201cThrough this deal, Uber Eats India users now become Zomato users. I want to assure Uber Eats India users that their user experience won\u2019t be compromised in any way \u2013 if at all, the scale gives us higher density to make our deliveries faster.\u201d<\/p>\n Uber started its food-delivery business in India in 2017 with much\u00a0fanfare<\/a>\u00a0and a huge marketing budget.<\/p>\n The San Francisco-based company has since poured resources into the operations to lure users with bargain food deals delivered to the doorstep, but it\u2019s pitted against competitors with powerful investors.<\/p>\n Naspers-backed Swiggy and Zomato, backed by Jack Ma\u2019s Ant Financial, now lead India\u2019s food-delivery sector, which like\u00a0elsewhere<\/a>\u00a0is showing signs of consolidation.<\/p>\n Bangalore-based ANI Technologies Pvt, which owns the Ola ride-hailing brand, acquired the Indian unit of Foodpanda in December 2017 and also faces an uphill struggle against the two established players.<\/p>\n Uber, whose shares are down 22% from their 2019 IPO price, said it will continue to expand its core Indian business after unloading Eats.<\/p>\n Employees that lose their jobs as a result of the deal can reapply for other roles within the company, the person said.<\/p>\n \u201cIndia remains an exceptionally important market to Uber and we will continue to invest in growing our local rides business,\u201d Uber chief executive officer Dara Khosrowshahi said in the statement.<\/p>\n
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