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Academic Task No.: CA 02 Academic Task Title: Analysis of Acquisition of Uber-Eat by Zomato in India
Declaration: I declare that this Assignment is my individual/Group work. I have not copied it from any
other student’s work or from any other source except where due acknowledgement is made explicitly in
the text, nor has any part been written for me by any other person.
UberEats parent company was founded in 2009 by Garret Camp and Travis Kalanick.
The company started its food delivery in August 2014 with the launch of UberFRESH in
California. The platform was renamed as UberEats which started its operation in
London in the year 2016. In August 2018, UberEats started its delivery fees depending
on the range or distance of the order placed. In the UK and Ireland, the delivery fees are
based on the value of the order. In November 2019, UberEats announced that it will
deliver the food through drones by summer of 2019. On January 21 Zomatoo acquired
UberEats in the all-stock acquisition, with UberEats gaining 9.99 per cent stake in
Zomato.
Zomato is an Indian restaurant and food delivery startup founded in the year 2008 by
Deepinder Goyal. Zomato offers its services in 24 countries and in 10,000 cities. In
2011, Zomato expanded its delivery across India in Delhi NCR, Mumbai, Banglore,
Chennai, Pune, Kolkata etc.
Zomato has acquired 12 startups globally. In July 2014 Zomato acquired the startup
Menu Menia. Zomato acquired Tongue stun in September 2018, a Bengaluru startup,
for cash and stock deal of 18 million dollars. Zomato also acquired Tech Angle startup in
Lucknow that worked on drones.
Zomato acquired stocks of UberEats for a deal value of 350 million dollars on 21st
January 2020.
Swiggy and Zomato will try to attract the customers after the acquisition of Uber Eat with
discounts, offers and subsidies and this will be their ongoing strategy. Restaurants who
are already with Zomato will give a gold offer to their customers such as dining out and
delivery. But restaurants will lose their bargaining power. Also, 100 employees will be
reallocated or laid off due to acquisition .
The terms ‘all-cash’ and ‘all-stock deal’ is used in the transaction of merger and
acquisition.In an all-cash deal, the equity portion of the balance sheet of the parent
company remains unchanged. But in an all-stock deal, the equity portion of the balance
sheet gets affected. All-cash merger and acquisition deals are those which occur
without any exchange of stock or equity and this is because trading happens when the
trading company purchases shares of the other company in cash. This type of situation
arises when the company acquires an even larger company that has a large amount of
cash, so the financial situation of the companies does not get directly affected.
CONCLUSION
Zomato acquired Uber Eats for an all-stock acquisition deal. This deal will provide great
discounts to customers and it will be the most beneficial to them. The stock deal is done
by the companies operating in the same line of business. Resulting in Zomato becoming
number one in food marketing and food supply or in other words as the megastar of the
food business. Moreover, Uber Eats can invest their money in other growing business.