In a surprising move, Uber Eats, the food delivery arm of the global ride-hailing platform, is said to be in final stages of negotiations to sell its India business to rival Swiggy, according to a latest report. The deal is expected to close as soon as next month. This will be Swiggy’s largest acquisition to date and Uber’s first divestment of its food business globally.
The transaction is likely to be a share swap, giving Uber around 10% stake in Swiggy which is last valued at $3.3 billion. The move is in-line with Uber’s global strategy to cut down on losses as it prepares for a possible $120 billion public offering. Uber Eats is estimated to be valued at over $20 billion. The business generated $1.5 billion in revenue globally in the first quarter of 2018, according to the Information.
Both Swiggy and Zomato have been raising capital since last year or so as they aim to acquire new customers. Along with these two, the market has also witnessed Uber Eats and Ola’s Foodpanda which has led to high cash burn by these companies. Sources also claim that Uber Eats had discussions with Zomato, but those talks fell through.
Uber Eats India racked up a cash burn of around $25 million on an average 9 million orders a month. Swiggy burns about $40-45 million a month on its food business, according to industry estimates. Over the last couple of months, Uber Eats has grown in markets such as Hyderabad, Chennai, and Pune. Uber Eats was launched in May 2017 and is currently present in 37 cities across the country.