Partnerships / Acquisitions

Uber Negotiating With India Rival Zomato To Unload Eats Biz

India, uber, eats, zomato, food delivery, merger, news

Uber could invest $100-200 million in competitor Zomato as part of a deal to unload its food delivery arm Uber Eats, Economic Times (ET) reported on Monday (Dec. 16), citing sources. 

A merger deal could be announced this week and would result in the largest food delivery business in India, ahead of Swiggy.

“While the agreement is not signed yet, they are in a period of exclusivity, which means both parties cannot engage with others. Uber’s capital commitment can range between $100 million and $200 million, but this may be along with a few other investment funds,” one of the sources told ET.

Another source said that the deal is contingent on Uber’s investment in Zomato. “They want Uber to have skin in the game or else it won’t make sense for the Indian company.”

An executive with knowledge of the deal told ET that Uber Eats loses about ₹50-80 per order in India. “This burn is high and there will be a lot of processes that Zomato will have to set right after the deal goes through.”

The sources said that Uber Eats makes about a half-million deliveries in India compared to Swiggy’s 1.4-1.5 million and Zomato’s 1.25 million daily orders.

Last week, European food-delivery for firm Delivery Hero SE agreed to buy a South Korean competitor for $4 billion, ramping up the global battle to satisfy increasing consumer demand for delivered meals.

India is the second location where Uber has stopped delivering food, The Wall Street Journal (WSJ) reported. The Silicon Valley tech giant said in September it was planning to seize Eats operations in South Korea.

South Korea’s Woowa, the startup behind the Baedal Minjok app — commonly known as Baemin — was offered $4 billion by Berlin-based Delivery Hero in an acquisition deal announced last week.

Before the deal is sealed it must undergo an antitrust review since Delivery Hero also owns Yogiyo, which is Baemin’s biggest rival. Delivery Hero acquired a majority stake in Yogiyo in 2014.

 

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