Rocket Internet has shuffled the online takeout pack of cards once again. This time the publicly-listed German ‘startup factory’ and investor is selling foodpanda to its much larger rival Delivery Hero, of which it also holds a significant stake. A move that should help fatten up Delivery Hero a little more for a long-rumoured planned IPO of its own. Terms of the acquisition remain undisclosed.
What we do know, however, is that the acquisition of foodpanda will be funded through the issuance of new shares in Delivery Hero to existing foodpanda shareholders. As a result, Rocket Internet will increase its ownership in Delivery Hero to 37.7 per cent on a fully diluted basis post transaction. The transaction is subject to customary closing conditions and is expected to close prior to December 31, 2016.
Meanwhile, Delivery Hero, which was most recently valued at $3.1 billion and competes directly with publicly-listed Just Eat, along with newer premium entrants such as Deliveroo, Uber Eats and Amazon, says the acquisition strengthens its “global leadership position” in online food ordering and delivery. The combined group is expected to process over 20 million orders per month across 47 countries.
Specifically, foodpanda will add 20 new countries in Eastern Europe, MENA and Asia to Delivery Hero’s platform. It currently processes approximately 2 million monthly orders across the 22 countries it operates in, claiming to be the market leader in 17 of them. In addition, Delivery Hero says foodpanda will enable it to consolidate its market leadership position in the Middle East.
Both Delivery Hero and foodpanda are headquartered in Berlin and began life very much as rivals, but over the last couple of years — and given Rocket Internet’s slightly peculiar stakes in both companies — have morphed into frenemies of sorts.
This has seen multiple local properties swap hands, perhaps in recognition that the takeout aggregator space is increasingly a winner takes all market where competing hard can be costly in terms of customer acquisition and retention. Today’s full purchase of foodpanda by Delivery Hero brings that strategy to its ultimate conclusion.