Delivery Hero sells German delivery service business to Takeaway

Only about one and a half years ago Delivery Hero went public for the first time, now the world's largest food delivery service has sold its German business for almost one billion euros to the Dutch competitor Takeaway.com. The start-up based in Berlin will deliver its German services Lieferheld, Pizza.de and foodora and receive cash and shares of Takeaway.com in the amount of 930 million euros, said the MDax listed companies. Part of the capital, Delivery Hero wants to invest in further growth.

"This transaction brings many benefits to the company and improves our positioning," said Delivery Chief Niklas Östberg. "Notwithstanding the sale of the German business, we will not only meet but exceed our revenue targets for 2019. At the same time, we will own a stake in Takeaway.com and have significantly more cash."

Delivery Hero is fiercely contested with Takeaway, JustEat and Deliveroo from the UK and Uber Eats. Berliners had also concentrated on delivering their food orders via their own Foodora service, which is particularly cost-intensive. For the German market, Delivery Hero had recently been seen as the leader in terms of sales.

Loss of around 300 million euros expected

Now the company is giving its German services to its rival Takeaway. According to the information, Delivery Hero receives 508 million euros in cash and 9.5 million shares of Takeaway worth 422 million euros. Delivery will therefore hold about 18 percent of takeaway in the future. The project should be completed in the first half of 2019.

Shortly after the IPO, the Berlin start-up factory Rocket Internet had sold large shares in the delivery service to the South African media group Naspers. Delivery Hero has not worked profitably so far, and in recent years the company has suffered some losses. This is not unusual for start-ups, but then they depend on the funders to believe in the business model and stick to it.

According to Delivery Hero, about half of the inflowing cash is to be reinvested. For the year 2019, sales between 1.08 and 1.15 billion euros are expected. But it is also planned with a loss between 270 and 320 million euros (adjusted Ebitda).

Only at the beginning of November had Delivery Hero set higher targets for the year as a whole. In summer, the company, which operates in 39 countries, announced additional investments worth 80 million euros. For this reason, the company initially postponed its goal for the end of 2018 of breaking the breakeven point in its adjusted operating result.