Uber Technologies, Inc., commonly known as Uber expanded its business from cab-hailing services to food delivery services and launched UberEats food delivery services in India in 2017. When it was announced, the new product was seen as competitors like Swiggy and Zomato. A common perception prevailed during the launch was that Uber Eats could be the third effective option for India to expand its food ordering consumer actively. Two years later, people are still far from such belief.
Uber Eats has been in rough times for the past few quarters, with key executives also leaving. Uber’s situation has been unsatisfactory. The initial public offering (IPO) exposed the major loss the company was suffering, its founders were ready to build something new, and didn’t waste much time before selling the stock or leaving the company. Of all this, Uber is reportedly preparing to sell UberEats’ Indian operations to Zomato. As per people familiar with the matter said the US-based giant is considering cutting global spending and is, therefore, taking action. According to the report, the transaction currently values UberEats’ business in India at approximately US$ 400 million. As part of the deal, Uber may invest roughly US$ 150 to 200 million in Zomato and acquire a substantial stake in the company.
The report further added that the two companies are still negotiating terms, but the transaction may be completed by the end of this year. The development was completed when Zomato entered the final stage, and the company was about to complete a new round of financing of about US$ 600 million, which could bring the company’s valuation to US$ 3 billion. If the deal completes as planned, it would be comforting for Uber and mark the end of a year-long effort to transfer Uber’s Indian business to Zomato or Swiggy after more than a year of negotiations. Recently, in an earnings conference call, Uber CEO Mr. Khosrowshahi has acknowledged that UberEats faces fierce competition in India. Still, he suggested that UberEats continue to do business in the food delivery sector. The company expects negative revenue for its UberEats business in India from August to December this year to be US$ 107.5 million.