Filings show Uber Eats sold India unit for $206 million

Ride-hailing major Uber sold its India food delivery business to larger rival Zomato for $206 million in return for a 9.99% stake, regulatory filings by the US-based firm show. The all-stock deal was first announced on January 22. Uber said in its filing that the “estimated fair value of the consideration received is $206 million, which includes the investment valued at $171 million and the $35 million of reimbursement of goods and services tax receivable from Zomato.”

Zomato’s valuation, which stood at over $3 billion in January, seems to have, however, been discounted during its buyout of Uber Eats India. According to the restaurant discovery and online food-delivery app, the discrepancy in the valuation was because Uber did not receive the same rights as that of a primary investor. “The Uber deal was done at a lower valuation since it didn’t get any rights that a primary investor would have gotten, for instance, liquidation preference, right to information, etc,” a Zomato spokesperson told ET.

Zomato Media allotted 76,376 Non-Voting Compulsorily Convertible Cumulative Preference Shares to Uber India Systems, with a face value of Rs 9,000 at a premium of Rs 1,71,153, for a total issue price of Rs 1,80,153 per share, regulatory filings by Zomato on February 4 showed. “In consideration for the purchase of shares of Uber Eats, Zomato has paid through the issuance of Compulsorily Convertible Cumulative Preference Shares in itself to Uber, which is allowed under Indian laws,” said Dipti Lavya Swain, M&A lawyer and Partner, HSA Advocates. “This way Uber has effectively made an investment in Zomato,” he said.

On January 10, according to a stock exchange filing by Zomato parent Info Edge, existing investor Ant Financial, an affiliate of Chinese internet giant Alibaba, led a $150 million investment round, valuing it at over $3 billion pre-money, or before the investment. Rival Swiggy’s valuation has stayed largely flat over the last 12 months. Uber said in its annual disclosures that its ownership in companies including Zomato comes with significant risks outside its control. “We are not represented on the management team or board of directors of Didi or Zomato, and therefore we do not participate in the day-to-day management or the actions taken by the board of directors of Didi and Zomato,” the filing said. Didi Chuxing is a Chinese ride-hailing platform where Uber holds a stake after it sold its China business in 2016.

Uber is contractually restricted from competing with Zomato in India with respect to meal delivery through January 2023.

Source:- Economic Times