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Dec, 19 2017

Ola Acquires FoodPanda India Business To Further Invest $200 Million

Ola is focused on diversifying its offerings by making an acquisition in the food delivery segment

Ride-hailing player Ola is making an entry into the food delivery space again, this time by acquiring Foodpanda India from Germany based Delivery Hero Group.

While the companies did not disclose the details of the deal size, sources have pegged the stock-based acquisition at under $50 million. The move will also see Ola invest another $200 million, as it takes on rival UberEats and incumbents like Zomato and Swiggy.

Saurabh Kochhar, former CEO of Foodpanda India has left the company and Pranay Jivrajka, founding partner at Ola has been appointed as the interim CEO of Foodpanda and will work with the existing leadership team at the company.

Bhavish Aggarwal, CEO of Ola said “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.”

Ola cab drivers would pick up the food from the partner restaurants and deliver orders that came up when they were driving around the locality. This made a significant dent on the revenue that came from the regular cab rides.

According to analysts, Ola is focussed on diversifying its offerings by making an acquisition in the food delivery segment, after lessons learnt on starting up and failing with Ola Cafe in the past. The $200 million investment in Foodpanda is not a very high figure, so Ola has made a significant entry into acquiring a sizable portion of the food delivery space through this move. Through this deal it will easily take on UberEats, which is also failing to pick up traction for varied reasons, from customer stickiness to high restaurant commission charges at 30%.

Delivery Hero CEO, Niklas Ostberg said “The Delivery Hero Group believes the partnership with Ola, will enable the company to further consolidate markets where it strategically makes sense to collaborated with leading local players. We consider our stake in Ola as a very valuable asset, while Ola’s investment commitment in Foodpanda India is a clear and confident sign to the Indian market”.

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