Acquisitions

It’s official: Zomato Finally Acquires UberEats in All Stock Deal

After months of intense speculations, food delivery major Zomato has finally announced the acquisition of UberEats’ Indian business. The all-stock deal will enable the US based ride hailing giant Uber to acquire 9.99% stake in Zomato. The acquisition deal also paves way for the end of UberEats operation in India. In other words, the brand UberEats will henceforth cease to exist in India.

Effective from today, UberEats’ existing customers and all delivery partners will be shifted to Zomato’s app.

“This acquisition significantly strengthens our position in the category, founder and CEO Deepinder Goyal commented on company’s official blog. “With UberEats Zomato will now have 55% share in India’s food delivery market”

Dara Khosrowshahi, CEO of Uber, reaffirmed through Zomato’s blog post that “India remains an exceptionally market to Uber and we will continue to invest in growing our local rides business, which is already the clear category leader.”

What does this acquisition mean for India’s food delivery industry

Zomato’s acquisition of UberEats certainly signifies the buildup of consolidation in India’s food delivery industry. Yagnesh Sanghrajka, Chief Financial Officer at  100X.VC, certainly feels so.

“Uber selling UberEats to Zomato is a sign of consolidation which happens typically to achieve leadership post companies achieving sizeable aggregation. Zomato now has more than 50% share in food delivery market with this deal.The strength of delivery network of UberEats will benefit Zomato in growing its market share in South India and hence compete more fiercely with Swiggy nationwide,” Yagnesh Sanghrajka said.

Another factor that is triggering this consolidation is unsustainability of food delivery business for Ola and Uber. Both ride hailing majors had entered India’s food delivery industry as late as 2017 with the hope to dent the market. But with UberEats virtually going extinct in india and Ola scaling down its food delivery business, this hope has virtually fizzled down.

Therefore, today India’s food delivery industry has been consolidated into a two horserace between Swiggy and Zomato.

 

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