"India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business," Uber CEO Dara Khosrowshahi said in a statement released by both companies.
The all stock deal with Zomato gives Uber a 9.99% stake in the Indian startup. Zomato which countsAlibaba (BABA)affiliate Ant Financial as one of its major investors was last valued at $2.2 billion, according to CB Insights.
The acquisition of Uber Eats "significantly strengthens our position" in India's food delivery wars, Zomato founder and CEO Deepinder Goyal said in the statement.
Zomato has been battling local rival Swiggy, which isbacked byanother Chinese tech giant:Tencent (TCEHY). Swiggy is valued at $3.3 billion, according to CB Insights.
Uber Eats launched in India in May 2017 and had been playing catch-up to its Indian rivals ever since. Khosrowshahi foreshadowed the India exit last year.
In India, Uber Eats users will be redirected to the Zomato app starting on Tuesday. A spokeswoman for the Indian startup said the companies are in the process of moving restaurants and delivery workers on the Uber Eats platform over to Zomato.
-- Rishi Iyengar and Michelle Toh contributed to this report.