The news has been come out that Uber has reached its advanced stages of discussion with Zomato about selling their Ubereats India business to them. This is done as a part of their plan to reduce its global expenditure. Zomato was one of the major competitors for them in India and now they have decided to sell their business to this food delivery business giant.
UberEats India’s business is currently valued at $400 million and it is being said that Uber will invest around $150 to $200 million in Zomato to buy the stakes and be a part of their business. Zomato has been in India for 11 years. Uber and Zomato have been discussing the deals for months and it is expected to be finalized by the end of December this year.
The deal and all related details are apparently being kept confidential as of now since the Zomato founder and CEO Deepinder Goyal has refused to talk anything related to their meeting with Uber executives which had happened last week.
The talks between the two companies were reported in the Times of India last month, but many details are not available. Goyal had mentioned earlier this year to the news agency PTI that the talks were made at a time when Zomato was in the final stages of closing a new financing round of $600 million.
The US fast-food giant has been trying to offload the Uber Eats India business for over a year and has been carrying out multiple conversations with Zomato and Prosus Ventures regarding the same. Their year-long struggles will be ending soon if the deal closes.
Uber eats never was a competition to Zomato or Swiggy since it’s launch in mid-2017. The other two had at least 1 million orders per day. UberEats had offered major discounts to its customers and still could not catch up with the amount of popularity which was gained by Swiggy and Zomato.
Their daily orders numbered less than 6,00,000 and it became difficult for UberEats to handle their business when two of their key executives- Bhavik Rathod ( UberEats India and Southeast Asia Head) and Deepak Reddy ( Head of Central Operations, India) left the firm.
The Head of Uber Eats Dara Khosrowshahi had said that the competition in India is quite high for their business but still the company wants to stay committed to India. He also said that UberEats generally aim to be the top #1 or #2 in any of their markets but in India, they are #3 and they are ready to be in the game. This was said by him in August.
The company projected a negative earning of $104.5 million in India between August and December 2019 and offloading UberEats business in India would be the best option for Uber to reduce their global losses. They had exit South Asia last year for the same reasons. A quarterly loss of $1 million was reported in November and lots of jobs were cut this year. Uber says that they are aiming to get profitable by 2021.
Zomato was also not at a profitable end and it was losing $40 million every month, which, they now reduced to $20 million. Swiggy, however, is expanding its horizons and exploring different markets in various cities. They are said to have a long term business strategy which has brought its worth from $746 million last year to $1 billion this year.
But in spite of their earnings, Swiggy is also not profitable like Zomato and Uber.