Delivery Hero acquires Zomato's UAE biz for $172 Mn

Three days ago, Zomato had received a $62.25 million funding tranche led by Delivery Hero, and each of us wondered what happened to the talks about the German food tech giant acquiring Zomato’s UAE business.

The suspense is now over as the deal has now been closed, and Zomato sold its UAE food delivery operations to Talabat Middle East Internet Services LLC, UAE entity of Delivery Hero, for $172 million.

The deal only includes the core business of Zomato, food delivery, and not the Zomato Gold or ad revenue business.

For Delivery Hero, as per a filing by the company, the acquisition is poised to add 1.2 million orders and $2 million revenue on a monthly basis to the Middle East and North African business of the company.

It has also made Delivery Hero one of the dominant players in the market with 35-40 per cent share of food tech market in the region.

The Deepinder Goyal-led company was earlier seeking a $200-250 million amount for the acquisition. However, it turns out that the deal was finalised in $172 million, with Delivery Hero committing an extra $50 million of funding in the global business of Zomato.

In the previous $62.25 million funding tranche, Delivery Hero invested approximately $50 million for 2.26 per cent stake in the Gurugram-headquartered company.

Over the past one month, Zomato has raised approximately $105 million as a part of its ongoing Series I round with a new set of investors including Delivery Hero, Glade Brook Capital, Shunwei Capital, and Saturn Shine Ltd.

With this round Ant Financial, has become the single largest stakeholder in Zomato with 28 per cent stake in the company.

Info Edge, the earliest backer of the Gurugram based company also held the same stake previously. However, looking at the cash burning battle between its portfolio and Swiggy, it decided to stay out of the current round.

As a result, the stake held by the Sanjeev Bikhchandani led company has reduced to 26.38 per cent, from 27.68 per cent on a fully converted and diluted basis. The stake had gone from 30.91 per cent to 27.68 per cent in the Ant Financial $210 million funding tranche that took place last October.

Till now the Series I round has raked in $315 million in total funding, where Zomato aims to take the round to $1 billion. $172 million is an extra acquisition amount received by the firm, as per an ET report.