Foodpanda gobbles up rival JustEat India; combined entity to have 250 employees in India

NEW DELHI: Foodpanda has acquired rival JustEat in India in a stock-led deal, positioning it directly against restaurant search service Zomato that is expected to allow users to also order food via its platform.

This is one of seven food delivery startups Foodpanda bought across Asia on Thursday .

As part of the transaction, UK-based JustEat will acquire an undisclosed stake in the combined Indian entity , which will be India's largest food-ordering provider with a presence in more than 200 cities across 12,000 restaurants.The online food services market is valued at over $14 billion (about Rs 86,600 crore) in India and $371 billion globally.

Zomato, which is expected to leverage its listings of about 50,000 restaurants in India by building its own ordering platform globally, is likely to pose the biggest challenge to Rocket Internet-backed Foodpanda.

“JustEat had held talks last year with Zomato, focused on establishing a partnership. But Zomato, at the time, was not too keen on the online food ordering space,“ said a person aware of the developments. “That is expected to change now.”

Zomato declined to comment for the story .

Launched in 2008, Zomato has since then raised close to $113 million, while Foodpanda has raised at least $100 million since its launch four years later.

UK-based JustEat had relinquished its majority stake in its India entity in November 2013, reducing its holding to 49.9% when Axon Partners Group and Forum Synergies India invested an undisclosed amount in JustEat India.

“JustEat had a very strong play in the South Indian market. Where we operate in the world, our aim is to be the undisputed leader in that country. This buyout is geared towards that strategy,“ said Rohit Chadda, co-founder and managing director at Foodpanda India.

Foodpanda will operate JustEat India as a separate company and later look to merge it. The combined entity will have 250 employees in India.

Foodpanda also acquired Room Service in Malaysia, City Delivery in Philippines, Eat Oye in Pakistan and Koziness in Hong Kong as part of a larger Asia strategy.

“With the recent acquisitions, Foodpanda becomes the market leader across South East Asia,“ said Ralf Wenzel, co-founder and CEO of Foodpanda group.

In November, Foodpanda had bought TastyKhana in a deal estimated to have earned the latter's main backer, Delivery Hero, returns of between $15million and $25 million, according to people familiar with the development.

Earlier in November 2013, UK-based JustEat had relinquished its majority stake in its India entity, reducing its holding to 49.9% when Axon Partners Group and Forum Synergies India invested an undisclosed amount in JustEat India.

“JustEat had a very strong play in the South Indian market. Where we operate in the world, our aim is to be the undisputed leader in that country. This buyout is geared towards that strategy,“ said Rohit Chadda, cofounder and managing director at Foodpanda India.

According a source privy to the group's plans, Foodpanda, TastyKhana and JustEat are likely to be merged under a single entity in India.

Foodpanda now has tie-ups with about 30,000 restaurants in 40 countries, while Zomato, following a string of recent acquisitions, has close to one million listings across 22 countries.

In a related move, Berlin-based Rocket Internet Group announced the creation of Global Online Takeaway Group, which combines its stake in Foodpanda, its emerging market leader in the online food takeaway sector, and its acquisition of a 30% stake in Delivery Hero for $586 million.

“The larger idea behind consolidation in various markets by Rocket Internet is to have an IPO for its food-delivery business, which may be valued at between $2 billion and $2.5 billion next year,“ said a person familiar with the group's plans.

Oliver Samwer, CEO of Rocket Internet, said Global Online Takeway Group processes around 78 million orders a year from 140,000 restaurants across 64 countries.