Online food delivery and restaurant discovery platform Zomato has acquired Uber’s Food Delivery Business in India for over $350 million or nearly Rs 2,500 crore in an all-stock deal. Uber will now only have 9.99 per cent stake in the food delivery platform.

“This acquisition significantly strengthens our position in the category,” said Deepinder Goyal, Founder and CEO, Zomato.

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Uber Eats in India will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective from Tuesday.

However, reports suggested that Alibaba’s Ant Financial-backed venture will not absorb in Uber’s other verticals or could face lay-off. So far there is no clarity on the issue.

According to company sources, for the first three quarters of 2019, “our Uber Eats business comprised 3 per cent of our global Eats gross bookings, but was more than 25 per cent of our global Eats Segment Adjusted EBITDA losses”.

Even though Uber Eats ventured in the Indian food delivery market in mid-2017, it failed to reach the level of Swiggy and Zomato. Currently Uber Eats hold the third position in the market, preceded by its rivals Swiggy and Zomato, with only 2,50,000-3,00,000 orders per day for around 26,000 restaurants in 40 cities. Whereas, its rivals clock around total 2-2.5 million orders on a daily basis.

“With our expansion to 550+ cities over the last year, our continued focus on user experience and our commitment to operating excellence, we have demonstrated our ability to execute on a variety of parameters,” Zomato said in a statement.

As per the recent study, the online food ordering market in India is likely to grow at over 16 per cent annually to touch $17.02 billion by 2023.

Uber CEO Dara Khosrowshahi said that the Uber Eats team in India has achieved an incredible amount over the last two years.

“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,” said Khosrowshahi.

“We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success,” he added.

On January 10, Zomato had announced that it has secured $150 million in fresh funding from Ant Financial, a subsidiary of China-based giant Alibaba.

The latest round of funding in Zomato, which currently values the company at $3 billion, is part of $600 million funding round announced by Zomato CEO Goyal at a Delhi event last December.

The deal comes in the wake of merger talks between Zomato and Swiggy, which both the companies have denied to date.

(With input from agencies)