Uber’s plans to sell its food delivery business Uber Eats to bigger rival Swiggy. The deal has run into rough weather because of tax and legal issues. The development comes even as there is a gap in terms of valuation expectations between the two rivals.
The deal is stuck for now and may only proceed after Uber’s public offering in the next one-two months. The transaction was being structured as a share-swap deal, with Uber taking shares in the buyer for the agreed-upon valuation ratio. Uber Eats will have to restructure its business before the deal goes forward as it registers all international revenues, including from India, to Uber BV registered in the Netherlands.
In the current form, the deal could attract significant withholding tax implications on unrealized gains made by Uber. Another reason which is making both the parties nervous is the potential legal scrutiny by watchdog Competition Commission of India, as the combine would control a significant majority of the market share.