Zomato’s acquisition of Uber Eats India valued at $206m

Table setting at Zomato Summit. Photo: Zomato

Uber Technologies Inc sold its India food business – Uber Eats India – to rival Zomato for $206 million in cash and shares, according to the Silicon Valley-headquartered ride-hailing giant’s filing with the US Securities and Exchange Commission (SEC).

The filing specified, for the first time, the financial terms of the deal that was first announced by both companies in late January. According to the disclosure, Uber will offload the business in return for 9.99 per cent compulsorily convertible cumulative preference shares of Zomato.

Uber will also receive approximately $35 million in cash for reimbursement by Zomato of goods and services tax.

The estimated fair value of the consideration received is $206 million, which includes the investment valued at $171 million and the $35 million of reimbursement of goods and services tax receivable from Zomato.

In an earlier statement, both companies said that, as part of the deal, the US company will shutter operations but direct all restaurants, delivery companies, and diners to Zomato.

“The divestiture of Uber Eats India does not represent a strategic shift that will have a major effect on the company’s operations and financial results, and does therefore not qualify for reporting as a discontinued operation,” Uber said.

While Zomato was valued at $3 billion after it raised $150 million in January from Chinese online payment services provider Ant Financial, the deal with Uber seems to value its 9.99 per cent stake lower.

The deal comes at a time when Zomato has been making headlines for looking to raise $600 million, to be led by existing investor Ant Financial. It’s closest rival Swiggy, on the other hand, is in advanced stages of closing a $700-750-million round, to be led by existing investor Naspers.

In a blog post, Zomato founder Deepinder Goyal said the competition in India’s food delivery sector will continue to be intense as the category is still very small compared to the overall foodservice market in the country.

“Through this deal, Uber Eats India users now become Zomato users. I want to assure Uber Eats India users that their user experience won’t be compromised in any way – if at all, the scale gives us higher density to make our deliveries faster,” Goyal said.

Singapore Reporter/s

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.