Delivery Hero Buys Foodpanda in Sought After Food Delivery Market

Berlin-based online food takeaway service Delivery Hero, one of Europe's biggest start-ups, will acquire competitor Foodpanda, a sign of further consolidation to fend off new competition in Europe's sought after food-delivery business.

Delivery Hero, which was valued at EUR 2.89 billion ($3.05 billion or roughly Rs. 20,614 crores) in its last funding round a year ago, in a statement on Saturday said it signed a definitive agreement to buy Foodpanda, itself a Berlin-based start-up.

Delivery Hero and Foodpanda are both backed by German e-commerce firm Rocket Internet, which invested EUR 800 million (roughly Rs. 5,706 crores) in Delivery Hero last year and holds 49.1 percent in Foodpanda which focuses on deliveries in Eastern Europe, the Middle East and Asia.

Delivery Hero said in a statement the acquisition will be funded by issuing new shares, with major shareholder Rocket increasing its stake by 1.1 percentage points to 37.7 percent.

Based on Delivery Hero's last valuation, the sales value of Rocket's stake in Foodpanda amounts to roughly EUR 31.8 million.

The companies did not disclose a purchase price but Foodpanda struggles with sales in Asian countries and other media reported earlier this year it failed to attract buyers at a $10-15 million valuation for its India business and closed its operations in Indonesia.

(Also see: Foodpanda Says Orders Rose 40 to 50 Percent During Demonetisation Phase)

Last month, Foodpanda announced plans to sell its Russian business, known as Delivery Club, for 100 million euros to Mail.ru, owners of VKontakte, the country's most popular social networking site.

Globally, Foodpanda took in 2 million monthly food orders compared with Delivery Hero's 18 million monthly orders. After consolidating overlapping businesses, Delivery Hero expects to be active in 47 countries, it said.

Currently Europe is home to many of the most active international players in the online food takeaway business and they are counting on their local ties, established customer bases and extensive restaurant networks to fend off new competition from the likes of Uber and Amazon.

© Thomson Reuters 2016