As Uber gears up for its IPO, this deal is being seen as a way for it to cut down losses from the India business.

Swiggy in talks to buy Indian arm of UberEats ET report
Atom FoodTech Friday, February 22, 2019 - 12:08

The fight between Swiggy and Zomato in the food order delivery business may extend to the takeover of Uber Eats, that the US ride sharing company reportedly wants to divest. According to a report in Economic Times, Swiggy in talks with Uber to buy its food order and delivery business. Uber has plans to go in for a public offering and this move is reportedly part of that overall plan and to show a slightly healthier financial picture. Zomato too, is reportedly in the race for UberEats.

The report states that the deal may involve a share swap where the shares of the acquiring company being allotted to Uber for the value of UberEats agreed upon. In India’s highly competitive FoodTech market, UberEats is a distant third, servicing roughly 150,000 to 250,000 orders a day. Swiggy and Zomato do multiple times of this. But the company seems to be faring better than Foodpanda run by competitor in the ride sharing business, Ola. According to some financial experts, the valuation of UberEats may get placed upwards of $500 million considering its gross run rate of around $250 million.

Uber has had similar experience in some of the other markets it had entered, like China and Russia where it ultimately sold its stakes and almost in all cases to competitors. In India too, the business of ride share is still running in losses facing tough competition from Ola.

The current move to go in for an IPO and to sell off UberEats that clocks a regular loss of $15-$20 million each month, might be part of a larger plan going forward. It may be relevant to understand Swiggy and Zomato keep losing around double this amount each month. However, given the demand, these food delivery majors are hoping that the sheer number they are able to rack up and the hotels and restaurants offering a little more, operations may break even.

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