Zomato Media, which owns and runs the online food delivery business, will sell its United Arab Emirates (UAE) food delivery business to a Berlin-based company, Delivery Hero for 172 million dollars, information was revealed by Zomato’s largest shareholder Infor Edge (India) Limited, on Monday.
Naspers backed Delivery Hero, and Zomato will sign up services agreements through which Zomato will be allowed to operate its online delivery business by using its own platform, Info Edge mentioned.
Info Edge, the shareholder of Zamoto and an online services firm will be holding a stake of around 26.38 percent in Zomato once the deal gets finalized.
Zomato- Gurugram based company has also raised a fund of 105 million USD in the current funding round along with its new investors Delivery Hero and Glade Brook Capital, Info Edge mentioned in a filing on the BSE. Zomato is competing with its rival Swiggy which is the largest food delivering business in India with huge cash.
Based on the transaction, Zomato Media has entered into a deal to sell its food delivery business of UAE to German-based company Delivery Hero Group via its entirely owned subsidiary Talabat Middle East Services Company LLC. The transaction that has been decided is around USD 172 million dollars, it added.
In an independent statement, Delivery Hero Group mentioned that the Hero group will be taking part in the latest funding round of Zomato and will be investing 50 million USD in the global business of Zomato so as to gain the top 10 shareholder position and will also involve it into material operational partnership agreement.
Once the deal is closed, the subsidiary of Zomato, Talabat Middle East will control and run its business which consists of ad sales and Zomato Gold and others.
It will be the second most attempt of Delivery Hero after their investment in Zomato to enter the Indian food delivery market. Back in 2014, Delivery Hero had surprised India after selling their stake in TastyKhana, a Pune based company to Foodpanda. Foodpanda is currently acquired by Ola.
CEO of Delivery Hero, Niklas Ostberg mentioned, “A successful food delivery business has been developed by Zomato in the UAE and India apart from it discovery app, search and website. The acquisition of UAE Zomato will further enable us to enhance our services to customers especially in UAE. The Company is also delighted to become a shareholder in Zomato which is the fastest and growing food delivering business in India and we are sharing our knowledge with them.”
The Delivery Hero Group stated that the UAE Zomato acquisition will further add 1.2 million orders every month, and the monthly revenue will be around 2 million dollars of Delivery Hero’s Middle Eastern and North African Businesses.
The plan of Zomato to sell its UAE business is during the time when Zomato is in talks to increase a fund of 500 million dollars to 1 billion dollars in fresh fund rounds, ET has mentioned it in its second edition in January. The transaction amount will help the Zomato sustain the cash reserves.
The CEO of Zomato, Deepinder Goyal stated that the company is looking ahead to learn from Delivery Hero from its global experience which will help us to enhance our food delivery business in India.
Info Edge stated that USD 210 million fundraise was announced in October 2018, the total amount of equity capital raised during the current financial round is around USD 315 million.
Naspers is also an investor in Delivery Hero group and it is also the largest stakeholder in Swiggy, which is the biggest rival of Zomato.