Uber Technologies Inc. (NYSE: UBER) is bowing out of the food delivery race in India.
The San Francisco-based company on Tuesday sold its Indian division of Uber Eats to homegrown rival Zomato.
In an all-stock deal, Uber will get 9.99% ownership of Zomato, and hand over all its logistics and operations infrastructure of Uber East India to Zomato, effective Tuesday.
"India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader," Uber CEO Dara Khosrowshahi said in a statement.
"We have been very impressed by Zomato's ability to grow rapidly in a capital-efficient manner and we wish them continued success," Khoswrshahi added.
Why It Matters
The reports of the two companies discussing the deal were floating since November last year.
The food delivery business in India was causing constant losses for Uber after it made a late entry in 2017 in a market already dominated by established domestic players Zomato and Swiggy.
"We are the undisputed market leaders in the food delivery category in India," Zomato proclaimed after the acquisition.
According to Statista, Zomato made up for 35% of the market share of India's online food delivery businesses at the end of 2018, followed by Swiggy at 24%, and Uber Eats and Domino's Pizza Inc. (NYSE: DPZ) each at 10%.
Zomato, which raised more than $360 million from Alibaba Group Holding Ltd.'s Ant Financial in 2018, was valued at more than $3.5 billion ahead of the acquisition.
Uber's shares closed 1.3% higher at $35.13 on Friday.