Zomato sells UAE business to Delivery Hero

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Source: Economic Times

Zomato Media, which owns and operates the eponymous online food delivery and restaurant discovery platform, has sold its United Arab Emirates delivery business to the Berlin-based Delivery Hero for $172 million.

The Gurgaon-based company, which is fighting a bruising battle with its cash-rich rival Swiggy, has also raised $105 million in its latest funding tranche with Naspers’ backed delivery Hero also participating in the fundraise.The $315 million round, which has been ongoing since last year values the company at $2 billion.

Zomato’s UAE business, which was operated by its subsidiary Talabat Middle East, will continue to own and run its allied businesses, which include Zomato Gold and ad sales, among others.The investment in Zomato will mark Delivery Hero’s second attempt at capturing the Indian food-delivery market. In 2014, it had exited India after selling its stake in Pune-based TastyKhana to Foodpanda, which is now owned by Ola.

Niklas Östberg, CEO of Delivery Hero, said, "Zomato has built a successful food delivery business in the UAE and India on the back of its restaurant search and discovery app and website. The acquisition will allow us to further improve our service to customers in the UAE. We are also excited to become a shareholder in Zomato's rapid food delivery growth story in India and share our learnings." 

The German group said the acquisition will add 1.2 million monthly orders and $2 million monthly revenue to Delivery Hero's Middle East and North Africa business.Zomato’s decision to sell its UAE business comes at a time when it is in talks to raise a $500 million to $1 billion in fresh funds, as ET reported in January 2 edition.

The sale proceeds will help Zomato shore up its cash reserves. The deal with Delivery Hero will also mean that it won’t be reliant on Alibaba’s affiliate Ant Financial, which is its single largest shareholder, for fresh cash. The Chinese firm’s stake in Zomato is estimated at about 28%.

Naspers, which is an investor in Delivery Hero, incidentally, is also the largest institutional stakeholder in Zomato’s biggest rival, Swiggy. The South African media and internet conglomerate last pumped in $660 million in Bengaluru-headquartered food delivery firm which was part of a larger $1 billion equity financing round in December last year valuing it at $3.3 billion.

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