Ola to acquire Foodpanda from Delivery Hero

Posted on December 20, 2017

India’s home-grown cab hailing platform, Ola, is all set to buy the food ordering and delivery platform, Foodpanda, in an all-stock deal. Foodpanda is the child company of the Germany – based food ordering and delivery platform, Delivery Hero. Ola will buy Foodpanda from Delivery Hero for an undisclosed amount. Ola also plans to invest ₹1,281 crores in Foodpanda after the acquisition. Read more on Acquisitions

Saurabh Kochhar, CEO of the loss-making company, Foodpanda will resign from his post after the acquisition deal goes through. The CEO of Foodpanda, post the acquisition will be, Ola’s founding partner, Pranay Jivrajka.

“The partnership with Ola will allow us to further consolidate markets where it strategically makes sense to collaborate with leading local players. At the same time, we consider our stake in Ola as a very valuable asset, while Ola’s investment commitment in Foodpanda India is a clear and confident signal to the Indian market. The Foodpanda India team has done a tremendous job building the business and we look forward to supporting them and the Ola team in the future”, Niklas Östberg, Chief Executive Officer (CEO) and co-founder of Delivery Hero said.

“I’m excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. As one of India’s pioneers in the food delivery space, Foodpanda has come to be a very efficient and profit-focused business over the last couple of years. Our commitment to invest US $200 million in Foodpanda India will help the business be focused on growth by creating value for customers and partners”, Ola’s co-founder and CEO, Bhavish Aggarwal said.

This is curiously Ola’s second foray into the food tech sector. During 2015, Ola launched its own food delivery platform called Ola Café which was operational in Delhi, Mumbai, Bengaluru and Hyderabad. The business had to shut down in November 2016 as it failed to make profits and because Ola could not simultaneously compete with rising Uber and focus on its food delivery business. Ola has probably ventured into the food delivery business again due to two main factors:

It had raised US $1.1 billion investments from SoftBank and other VC firms during September, this year.
It wants to compete with its arch-rival, Uber, which had launched UberEATS in six major Indian cities (Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Hyderabad) a few months back. UberEATS is a food ordering and delivery platform like Swiggy and Zomato.

It will be interesting to see how the scam-hit and loss-making Foodpanda competes with established startups in the food delivery sector like Swiggy and Zomato after the investment from Ola. Read more on Startup News