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Uber launched its on-demand food delivery app UberEATs in India just a few months back. And now it seems Ola is headed in the same direction. The ride-hailing app has now announced that it is acquiring Foodpanda's India business from Berlin-based company Delivery Hero Group in exchange for its stock.
The details of the deal have not yet been disclosed but reports have stated that the stock-based acquisition at under $50 million. Ola's investments in Foodpanda India business is the largest fund infusion in an Indian online food ordering and delivery company to date. However, with the merger Ola, owned by ANI Technologies, will also commit to investing $200 million in Foodpanda's India business.
Speaking on the deal, Ola Co-founder and CEO Bhavish Aggarwal said, "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."
Now with this new development, ex-CEO and co-founder Saurabh Kochhar has decided to move on to pursue other opportunities. Meanwhile, Ola's Founding Partner Pranay Jivrajka will take over as interim CEO of this business unit. He will be supported by the existing leadership team at Foodpanda India.
With over 15,000 restaurants across 100 Indian cities on its platform, Foodpanda's revenue for 2016-17 has climbed to Rs. 62.16 crore from Rs. 37.81 crore in the previous fiscal. More significantly, the company's losses have also narrowed down to 69 percent which is Rs. 44.81 crore compared to Zomato's reported loss of Rs 389 crore and Swiggy's widening loss of Rs 205 crore.
"The partnership with Ola will allow us to further consolidate markets where it strategically makes sense to collaborate with leading local players," Delivery Hero Chief Executive Niklas Ostberg said. Likewise, Ola has stated that Foodpanda India will benefit from its scale and efficiencies as a platform and it will continue to collaborate with Delivery Hero on building the online food delivery ecosystem in the country.
With this acquisition, Ola will be making it return to the food business since its food delivery business-Ola Cafe shut down in 2016. But again this time Ola might get lucky as the online food delivery market in India is expected to grow more. All in all, with this new merger Foodpanda, will likely to get a big boost in the country.