Zomato Media Private Ltd on Tuesday said it agreed to acquire ride-hailing company Uber Technologies Inc.'s food delivery business in India in an all-stock transaction.
The deal gives Uber a 9.99% stake in Zomato, said the food delivery company, which had just raised $150 million from its existing investor Ant Financial earlier this month at a pre-money valuation of $3 billion. Ant Financial is the payments affiliate of Chinese e-commerce conglomerate Alibaba Group Holding Ltd.
Deepinder Goyal, founder and CEO at Zomato, said in a blogpost, the acquisition significantly strengthens firm's position in the food delivery market.
The acquisition marks a big consolidation in the highly competitive and heavily funded food delivery market in India; and clearly heralds a two-way race between Zomato and rival Swiggy from hereon.
Uber’s food delivery business, Uber Eats, will discontinue operations in India and direct restaurants, delivery partners and users of its apps to Zomato, effective today.
Dara Khosrowshahi, CEO at Uber, said India remains an exceptionally important market to Uber and it will continue to invest in growing its cab-hailing business.
Separately in a stock market disclosure, Info Edge said its stake in Zomato will fall to 22.71% when the deal closes. The company, which operates a slew of internet businesses such as jobs portal Naukri.com, currently holds a 25.13% stake in Zomato.
Financial details of the transaction were not disclosed. However, The Economic Times cited two people it didn’t identify as saying that the deal value was around $350 million (Rs 2,485 crore).
Zomato, which makes its money through advertising, online ordering and subscription services, was founded in 2008. Its platform providing in-depth information for over 1.5 million restaurants across 24 countries and serves more than 70 million users every month.
In July last year, it acquired a non-profit food donation startup Feeding India, which allows people to donate food for charity.
Prior to the fundraising from earlier this month from Ant Financial, Zomato had last raised funding about a year ago, mopping up about $62 million from investors including Berlin-based Delivery Hero and China’s Shunwei Capital.
Gurugram-based Zomato reported consolidated net sales of Rs 332.27 crore, Rs 466.36 crore, and Rs 1,312.58 crore for the 2017, 2018 and 2019 financial years, according to VCCEdge, the data research arm of Mosaic Digital.
Rival Swiggy, had last raised $1 billion (just short of Rs 7,000 crore at current exchange rates) in a fresh round of funding led by South African technology conglomerate Naspers in December 2018. It had marked one of the single-largest infusions into an Indian startup.
Swiggy has also made some acquisitions in the past and was also reportedly eyeing UberEats.
