Delivery Hero, the biggest online food delivery company in the world, has agreed to partially sell its operations in Germany to Takeaway.com, its Dutch rival, in a deal that is valued at approximately €930 million (£838.3 million).
The said partnership includes the businesses that are owned by Delivery Hero in the region. It includes Lieferheld, Pizza.de, and Deliveroo-style app Foodora.
It will bring an end the expensive battle for dominance of the German takeaway market between the two companies, in which both firms heavily spent to build market share.
Jitse Groen, the chief of Takeaway, said that the acquisition “allows Takeaway.com to operate on a significantly larger scale, which is essential in building a profitable online food delivery business.”
he added: “There is still ample growth ahead, given that penetration of online food delivery in Germany is amongst the lowest in Europe.”
Groen said that he is expecting the takeover to double the annual online food delivery orders of Germany to 47 million.
Previously, Takeaway.com had said that it would turn a profit on earnings before interest, taxes, depreciation and amortization (EBITDA) by the third quarter of next year. Meanwhile, Delivery Hero, has also yet to turn a profit despite operating in Asia and the Americas as well as Europe.
Takeaway will be paying €508 million in cash, while Delivery Hero will also be receiving 9.5 million shares, worth €422 million, giving it an 18 percent stake in the firm.
The deal needs to be approved by its shareholders and is expected to close in the first half of the coming year. It could create more than €60 million in cost savings within two years for Takeaway.
The firm has committed debt financing amounting to €680 million for the cash portion of the said transaction. It said that it might refinance through the issuance of new shares in the future.