Uber announced on Tuesday that it had sold its food delivery business, Uber Eats, in India to local opposing Zomato as the American ride-hailing giant runs to shed loss-making services to become successful by next year.
The Specifications of the Deal
As part of the agreement, Uber would hold 9.99% of Zomato, and its Eats users will become a part of the Indian company, stated by both the loss-making firms.
The deal estimated between Uber Eats’ India and Zomato is somewhere between $160 million and $200 million.
Uber Eats, which started in India in 2017, began discussions to sell the local business in late 2018, stated people accustomed to the matter.
Dara Khosrowshahi, chief executive of Uber, said in a statement that Uber will proceed to fund in developing their local Rides business, which is now the clear category leader.
Although according to industry surveys, Uber is not the “clear category leader” in India.
That title applies to Ola, which processes double as several rides as Uber in India and is available in 110 cities, as compared to the American firm’s approximately three-dozen.
While for Uber Eats workers in India, a few of them have been given a choice to join Uber while the others will be let go, said by a spokesperson.
Industry Leaders… Or Not?
The news comes amidst of Zomato’s latest financing round.
The 11-year-old Indian company last month allocated $150 million from Ant Financial and stated that it sees to acquire another $400 million in the upcoming few weeks.
Satish Meena, an interpreter at Forrester, stated that despite the Uber deal, Zomato yet lags local competitor Swiggy, which sustains several orders every day.
Supported by Prosus Ventures, Swiggy allocated $1 billion in late 2018.
Offloading Uber Eats India will support Uber, which departed from Southeast Asia last year to lessen its global losses.
The company, which struck hundreds of jobs last year, announced a quarterly loss, which was more than $1 billion in November.
In the previous quarter, it lost around $5.2 billion.
Uber assumes that it strives to become effective by 2021.
SEE ALSO: Investors such as Sundar Pichai shoved Alphabet into the trillion-dollar club for the first time
For more updates and the latest tech news, keep reading iTMunch.
