Online food ordering platform Zomato has entered into an agreement to sell its UAE delivery business to Delivery Hero, the online food ordering and delivery marketplace, for USD 172 million.
The Berlin-headquartered firm made the purchase through its fully owned subsidiary Talabat Middle East Internet Services Company LLC (“Talabat”). The acquisition will provide it USD 2 million in monthly revenues and 1.2 million orders a month, besides market leadership against Uber Eats in the geography.
Delivery Hero said it will also participate in Zomato’s latest funding round by investing USD 50 million in its global business and also enter into a material operational partnership agreement.
Zomato has also closed its funding round of USD 315 million, led by Chinese payments major Ant Financial, soaring its valuation to USD 2.1 billion.
Analysts believe Middle East is a high-cost region, and Zomato could be cutting cost to focus on countries where the average-order-value and returns are high. The company is also facing stiff competition from its Indian rival Swiggy which recently raised USD 1 billion to enter the Unicorn club.
Economic Times reported that according to a source Zomato is also in the process of selling its food delivery business in Qatar and Lebanon to Delivery Hero for another USD 28 million.
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.“
Deepinder Goyal, CEO of Zomato, welcomed Delivery Hero as a partner and shareholder. He said Zomato looked forward to learning from Delivery Hero’s global experience to help strengthen their fast growing India food delivery business.