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Zomato in talks to acquire Uber’s food delivery biz in India: Report

For last one year, Uber has been exploring buyout deals to sell its loss-making Indian food delivery business UberEats India. After unsuccessful attempts with Swiggy and Amazon, it’s reportedly now in talks with Zomato for a potential acquisition.

The deal size is said to be around $500 million. Though, the final deal size may vary. Uber, which is reportedly focusing on a less crowded market, may also participate as an investor in Zomato’s next financing round.

“The merger talks include stock deals has reached to a term-sheet and said to be more realistic this time around,” said a TOI report quoting sources close to the matter.

This development comes as Zomato is in the midst of raising $200 million from existing backer Ant Financial at a $3 billion valuation.

Last week, a report of Zomato merger talks with Swiggy emerged. However, the Gurugram-based firm denied the report saying that it is currently focusing on business metrics and achieving profitability.

Earlier this year, Swiggy and Amazon were approached by UberEats, but talks faltered over differences in valuation. Amazon is also gearing up to launch its own online food delivery division soon.

Meanwhile, for both Swiggy and Zomato, the deal appears to just kill the third competitor in the space as the transaction hardly seems to add any significant value on the plates of food delivery majors.

In India, UberEats faces stiff competition from Swiggy and Zomato, that dominate the food delivery space. As per last reported figure, both Swiggy and Zomato are said to do monthly orders of 50 million each.

Uber is essentially selling its food delivery for controlling losses, especially after its poor show post IPO. UberEats is estimated to lose $15-20 million a month in India.

UberEats, which started its services in India in May 2017 claims to do around 2-3 lakh deliveries a day with a gross sales run-rate of $200 million. It is reported to have over 20-30K delivery executives employed across cities in India. The average order value of UberEats is Rs 140, which is almost half of what Swiggy and Zomato do.

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