In what may come as one of the most notable consolidation deals in the food delivery sector, Uber Eats, the food delivery subsidiary of Uber may sell its India business to Swiggy. The deal as per industry sources may materialise by the coming month and will be the largest acquisition for Swiggy.
The move is being cited in synch with Uber’s global strategy to shrink losses as it gears up for a $120 billion public offering. Industry experts value UberEats at around $20 billion. The business in the first quarter of the year 2018 generated $1.5 billion in revenue.
As per a statement published in ET Technology, “It is prudent to be invested in Swiggy than burn capital competing for the same set of restaurants and consumers,” stated a source.
“This should bring some rationality to the cash-guzzling food-delivery market,” added the source. Sources also say that Uber Eats was previously in talks with Zomato for the buyout, but the deal didn’t finalise.
The development comes in when Uber’s arch-rival in India, Ola has started cutting on its food delivery arm, Foodpanda and has reduced the customer acquisition and marketing costs for the same by almost two third.
“Food delivery is a perfect example of our strategy in action with online platform capabilities that address a large offline societal need in a high-growth market. It’s still early days, but if you look at the growth in revenue and the underlying operating metrics, it gives us real confidence in the potential here,” said Naspers CEO Bob van Dijk recently.
