Uber, earlier this year, was pulled out of the South Korean market, and facing escalated trials is reported to reduce its global losses. The company on Tuesday has announced that it has sold its Uber Eats food delivery business in India to the local rivalry company Zomato.
Last year, Uber eliminated hundred of jobs and faced a quarterly loss of more than $1 billion in November. And now, the company has decided to reduce the global losses and become profitable by 2021.
The deal was composed of an exchange of 9.99% of Uber’s stake in Zomato and becoming a part of the Indian company. Uber will now shut its operations to redirect restaurants, delivery partners, and users to the Zomato platform from Tuesday.
A person familiar with the matter told TechCrunch that the deal valued Uber Eats’ India business between $300 million and $350 million. Further adding to it about the employees of Uber Eats are given a chance to join Uber (online cab platform), and the rest will let go.
The company also officially posted a tweet saying – “We entered food delivery in India in 2017, and today is when our journey takes a different route. Zomato has acquired Uber Eats in India, and we’ll no longer be available here with immediate effect. We wish all our users more good times with great food on the road ahead.”
We entered food delivery in India in 2017 and today is when our journey takes a different route. Zomato has acquired Uber Eats in India and we’ll no longer be available here with immediate effect. We wish all our users more good times with great food on the road ahead pic.twitter.com/WEbJNaJY8M
— Uber Eats India (@UberEats_IND) January 21, 2020
Dara Khosrowshahi, chief executive of Uber, said in a statement – “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.”
This decision could further make Zomato the leading food delivery business in the country surpassing Swiggy, which is currently generating more orders per day than Zomato. And considering the statement of CEO of Uber, Ola is the clear category leader who processes twice times the ride than Uber in India. Also, Ola has its presence in 110 cities, which could not be compared to Uber’s total presence in around 35-40 cities.
Like Uber, Zomato is also on the track of reducing its losses, one of the investors in Zomato, told analysts in an earnings call in November. Furthermore, the acquisition of Uber by Zomato is the largest in the food delivery market and hopes Uber has its plans of becoming profitable by 2021 as its negative revenue has affected the business in India.