Local media, citing sources, says the deal is valued from $300 to 350 million. Moneycontrol could not independently verify the report.
Uber, which is aiming to turn profitable by 2021, had launched Uber Eats in India in 2017, and has about 26,000 restaurants listed on the platform across 41 cities.
"This acquisition significantly strengthens our position in the [food delivery] category", Zomato founder and CEO Deepinder Goyal said, as he tweeted the slogan of the purchase: "Together is better". The latest round of funding in Zomato, which now values the company at over $3 billion, is part of $600 million funding round announced by Zomato CEO Deepinder Goyal at a Delhi event in December.
As for Uber Eats employees in India, some of them have been given the option to join Uber while rest will be let go, people familiar with the matter told TechCrunch. Zomato has decided not to absorb Uber Eats team based in India.
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He added that the competition in this space would continue to be intense and the food delivery category was still very small when compared with the overall food service market in India. Swiggy, which has added 60,000 new restaurants in the past six months, said in October it would expand to 600 cities by December 2019.
Uber's sale of its Eats business in India makes sense, and echoes a similar step in South Korea as it cuts ties with unprofitable markets.
The platform will continue its core business of ride-sharing in India, where it competes with ANI Technologies Inc.'s Ola.
"Uber was looking to offload Uber Eats in India for some time because Dara Khosrowshahi (Uber CEO) wanted the company to move towards profitability", a source at Uber India said. The Zomato and Uber Eats combine will change the dynamics even further by giving Zomato's user base a big boost. Pulling out of India could kick up a 500 basis-point headwind to the Eats segment's sales growth yet deliver a 10 percentage-point boost to its Ebitda margin, which remains substantially lower than those of peers such as Just Eat and Grubhub. It was losing business by around 20 per cent of the company's EBIDTA margins and therefore made a decision to sell the business to Zomato. "For Uber, the deal means redefining competence", independent brand consultant Harish Bijoor said. Facing stiff competition from Zomato and Swiggy, Uber Eats had been making losses.