Via CNBC

Ride-hailing giant Uber said Tuesday it sold its food delivery business in India to its competitor Zomato in an all-stock transaction.

The sale gives Uber a 9.99% stake in the Indian restaurant aggregator and food delivery start-up.

Zomato is backed by Alibaba affiliate Ant Financial, which recently agreed to invest up to $150 million at a pre-money valuation of $3 billion, according to official filings from Zomato-shareholder Info Edge.

Based on that valuation, Uber’s stake in Zomato would be worth around $300 million. Uber declined to comment on the deal’s value.

Uber Eats is set to discontinue operations starting Tuesday, and it will direct restaurants, delivery partners and users to the Zomato app.

“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,” CEO Dara Khosrowshahi said in a statement.

The tech giant is under pressure from investors to turn its business around. Last year, the company reported a $5.2 billion loss in its second-quarter earnings and laid off hundreds of employees in 2019.

Uber will continue competing in the Indian ride-hailing market against start-up Ola. Previously, Uber ceded ground in China and Southeast Asia to local players Didi Chuxing and Grab, respectively and exited its Eats business in South Korea.

India’s online food delivery market

Asia has become the largest market for online food delivery globally, topping $45 billion in revenue in 2018 and is predicted to surpass $100 billion by 2025, according to an October report from Frost & Sullivan.

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While China held the largest percentage of that market share at 73%, India was the second-biggest at 13.2%, the report said.

The acquisition of Uber Eats is likely to bolster Zomato’s presence against its main competitor, Swiggy. The latter is backed by Naspers and counts China’s Meituan Dianping and tech behemoth Tencent as investors. Both companies have raised millions of dollars in funds and they are burning cash offering steep discounts to consumers in a bid to procure more market share.

In its first-half report for fiscal 2020, Zomato said its burn rate was down to 60% compared to six months earlier, without giving more details. Revenue came in at $205 million, jumping from $63 million in the same period a year ago. Local reports said Swiggy’s parent company, Bundl Technologies, reported a six-fold rise in losses for the fiscal year that ended in March 2019.

India’s fiscal year runs from Apr 1 to Mar. 31.