While the two companies did not share the deal size, sources said it was pegged at about $300-350 million

Zomato on Tuesday announced acquisition of Uber’s food delivery business, Uber Eats, in India in an all-stock deal.

The deal, which gives Uber 9.99% ownership in Zomato, underlines the U.S.-listed cab aggregator’s effort to cut back on loss-making business segments globally.

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

While the two companies did not share the deal size, sources said it was pegged at about $300-350 million.

“We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category,” Zomato CEO Deepinder Goyal said.

Uber Eats India is now Zomato. Here's to better food for more people, and new beginnings.



For more details: https://t.co/cq8Wp9ikOk pic.twitter.com/nK4ICY2ikW — Deepinder Goyal (@deepigoyal) January 21, 2020

Dara Khosrowshahi, CEO of Uber, said: “Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication.”

“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,” Mr. Khosrowshahi said.

Uber Eats which was launched in 2017 in India, had about 26,000 restaurant partners and garnered about 12% of the market, sources said. It was competing with Zomato as well as Swiggy in the segment.

The deal comes close on the heels of Zomato raising $150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a $3 billion valuation.

Sources said that with the sale of the food business, Uber would now focus on its rides business and expansion to tier 2 cities.