In what can only be seen as an unexpected (or rather expected!?) move in the food delivery segment, Foodpanda is being acquired by Berlin-based Delivery Hero. The financial terms of the transaction haven’t yet been disclosed but Rocket Internet is the common denominator for the two food delivery startups based out of Germany. The deal is expected to close prior to the end of this year, before 31st December.
Rocket Internet, which is known to invest in internet giants with proven business models and expanding it to new, fast-growing markets, is a backer of both businesses. Post the acquisition, however, the company’s stake in Delivery Hero will increase to 37.7 percent in comparison to the previous 30 percent. This change would come due to the 49 percent ownership the said Internet giant has in Foodpanda and will help Delivery Hero fund the buyout by issuing new shares.
Talking about the acquisition, Oliver Samwer, CEO of Rocket Internet, says,
The combination of Foodpanda and Delivery Hero, one of our most important companies, further consolidates key markets resulting in significantly improved market positions. Delivery Hero is also acquiring new markets with leading market positions further broadening its geographic footprint.
And we needn’t say anything for Foodpanda — as it might soon become just an operational name. This acquisition will now see Foodpanda’s business being merged with Delivery Hero to strengthen their hold over the food ordering and delivery ecosystem across the globe. Also, this will enable Delivery Hero to consolidate its position in the European market and add 20 new Asian, MENA and East Eauropean countries to its arsenal.
In addition, Rocket Internet mentions that the combined entity will be processing over 20 million orders per month across 47 countries. It will also lead to a sudden increase in the size of its total addressable market for Delivery Hero.
Speaking over the addition of Foodpanda to their business, Niklas Östberg, CEO of Delivery Hero, says,
Foodpanda has built a fantastic position and service offering in some of the largest food delivery markets globally. We look forward to working with the team to continue creating unparalleled takeaway experiences for our customers around the world.
Delivery Hero was founded by a cohort of six individuals, namely Kolja Hebenstreit, Niklas Östberg, Nikita Fahrenholz, Claude Ritter, David Bailey, Markus Fuhrmann in 2010 to tackle the demand for food ordering and delivery in Germany. Their ambitions were, however, not limited and the company expanded to become a worldwide network with 21 countries and over 73,000 restaurant partners. And the addition of Foodpanda to the $3 billion business will only further fuel the expansion.
The food delivery giants involved in this transaction have raised more than $1.5 billion combined, reports Bloomberg. These investments have been secured from marquee investors including the likes of Goldman Sachs and Insight Venture Partners. This move of dumping the flailing delivery startup over another of its entities also comes on the heels of Foodpanda selling off its Russian business to Mail.ru. And the India-based entity is already separate from the global one, so no repercussion expected there.
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