Ola to acquire Foodpanda’s operations in India, plans to invest $200 million


On Tuesday, Ola said it will acquire Foodpanda India business from Germany’s Delivery Hero, an online food ordering, and delivery marketplace, in exchange for its stock. Furthermore, Ola is set to invest another $200 million, which will help the company to compete with rival UberEATS and other players Zomato and Swiggy.

In 2014, Ola ventured into the food delivery business with Ola Cafe which failed due to aggressive competition. Ever since, Ola had been planning to get back into the food delivery business to compete against UberEATS, the food delivery service of rival Uber. UberEATS, a similar food delivery business launched by global ride-hailing player Uber in May. This acquisition of Foodpanda India will set Ola in the right direction. This deal will allow Ola to be a valuable player in this competitive market rather than starting from scratch.

Saurach Kochhar, the former CEO of Foodpanda India, left the company and decided to pursue other opportunities. Pranay Jivrajka, Founding Partner at Ola, appointed as interim CEO of Foodpanda and will work with existing leadership team.

Foodpanda operates in 100 cities with over 15,000 restaurants in its platform. Foodpanda India reported a 62 percent increase in its revenue. Consequently, It climbed to Rs 62.16 crore from Rs 37.81 crore for the previous fiscal year ended March 31. While the losses have declined 69 percent to  Rs 44.81 crore from Rs 143 crores.

Bhavish Aggarwal, Co-founder, and CEO at Ola, regarding the deal:

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 $200 million in Foodpanda India will help the business be focused on growth by creating value for customers and partners. With Delivery Hero’s global leadership and Ola’s platform capabilities with unique local insights, this partnership is born out of strength. I look forward to welcoming the Foodpanda India team to the Ola family.

Niklas Östberg, Chief Executive Officer and Co-founder of Delivery Hero AG, regarding the deal:

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.

Flipkart is planning to tap Swiggy by investing $50 million. The online food delivery business will reach $750 million this year from about $120 million in 2015, as per the report by consultant RedSeer

Source: Reuters , Ola Cabs

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