BEST DIGITAL NEWS START-UP, WAN-IFRA 2019 GOLD AWARD

Delivery Hero open to a deal with Rappi or Glovo

Delivery Hero open to a deal with Rappi or Glovo

3 -min read
Listen to this article
3 -min read
Listen to this article

[BERLIN] Delivery Hero said it's holding regular discussions with other food delivery companies about potential deals, reflecting an industrywide rush towards consolidation.

Chief executive officer Niklas Ostberg said he's in constant dialogue with peers, including Rappi and Glovo. "We are no longer in a position where we feel we have to do M&A (mergers and acquisitions), and we'd rather invest in our business," Mr Ostberg said in a video call on Tuesday. "But of course, if good opportunities come up, then we won't hesitate to take them."

The Berlin-based company is a shareholder in Rappi and Glovo. In 2018, Delivery Hero invested US$105 million in Rappi and 51 million euros (S$80.9 million) in Glovo. The talks with Bogota-based Rappi have centred on a potential acquisition of the business, said two people familiar with the situation.

Delivery Hero called attention to its appetite for deals a week ago when it outlined plans to sell as much as 1.5 billion euros of convertible bonds. The money is intended "for general corporate purposes and to take advantage of attractive investment opportunities that may arise," the company said.

Representatives for Rappi and Barcelona-based Glovo didn't immediately respond to requests for comment outside of regular business hours in Europe. Rappi was valued at US$2.5 billion in 2019 and soon after received a US$1 billion investment from SoftBank, making it one of Latin America's most valuable startups.

Food delivery is a crowded industry, with little room for profits. There have been two megadeals since last month intended to position the companies to someday generate profits. Europe's Just Eat Takeaway.com said it's buying Grubhub for US$7.3 billion, and Uber Technologies is buying Postmates for US$2.65 billion.

Delivery Hero has been on a spending spree of its own. It made its largest acquisition in December when it took control of South Korea's biggest food delivery app, Woowa Brothers, in a deal valued at US$4 billion. When the transaction is expected to close later this year, Delivery Hero could be valued at close to 30 billion euros, Mr Ostberg said.

Mr Ostberg said Delivery Hero has enough cash to compete with the likes of Uber Eats and South-east Asia's largest delivery platform, Grab. "We like to be well-capitalised for whatever may happen," he said.

BLOOMBERG

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes