Food Logistics Rocket Buys €496 Mln Stake in Delivery Chain

Rocket Internet, a Berlin startup incubator, said it bought a 30 percent stake Friday for nearly half a billion euros in Delivery Hero, a Berlin business that coordinates global food deliveries.
The German Delivery Hero service, Lieferheld, with its own cars in the company's home town, Berlin.

German start-up incubator Rocket Internet on Friday said it paid €496 million ($556 million) for a minority stake in Delivery Hero, a food delivery service, that valued the Berlin logistics business at €1.75 billion.

Rocket, which listed on the Frankfurt Stock Exchange last October, bought a 30 percent stake in Delivery Hero and became its largest single shareholder.

Rocket owns rival food delivery services FoodPanda and HelloFood, which focus mostly on 35 countries in Eastern Europe, Asia and Africa.

Delivery Hero has operations in 29 countries, including Central Europe, Scandinavia and Latin America with more than 100,000 restaurants and delivery services, according to its website.

We are the big investor now that can influence things, but that will happen in a friendly and team-spirited way Andreas Winiarski, Rocket Internet Spokesperson

Rocket said in a statement it would not seek to take over Delivery Hero.

“We will remain separate companies, and Delivery Hero will keep their management,” a Rocket Internet spokesperson, Andreas Winiarski, told Handelsblatt Global Edition.

“We are the big investor now who can influence things, but that will happen in a friendly and team-spirited way,” he said.

Rocket Internet paid for its stake in Delivery Hero with its own shares. Shares of Rocket traded in Frankfurt were up almost 7 percent at €49.96 after the purchase was announced.

The price of 496 million was paid “through a combination of both primary and secondary transactions,” a Rocket statement said on their website.

Rocket Internet also said it had bought seven other ventures to consolidate its market share of global online food orders, including JUST EAT, Food Runner and Koziness in Asia, and Le Nevera Roja and Pizzabo in southern Europe.

Rocket said those brands will be incorporated into FoodPanda.

The new stake in Delivery Hero and the other seven will be pooled in a Global Online Takeaway Group that includes 140,000 restaurants in 64 markets.

Delivery Hero was founded four years ago by Team Europe ventures in Berlin. Just like Rocket Internet’s FoodPanda and HelloFood, the online platforms parcel out food orders to participating restaurants for delivery.

The platforms impose a fee for the service.

The business model is similar to U.S. GrubHub, which was founded in 2004 and went public in April last year, raising nearly €174 million at the time.

Together the Rocket companies plan to deliver food to 64 countries and generate 78 million orders per year, the Berlin company said.

“Delivery Hero and FoodPanda are both in different countries,” said Mr. Winiarsiki. “They complement each other.”

Rocket Internet, which funds e-commerce start-ups, was founded by the three brothers, Alexander Marc and Oliver Samwer, in 2007. They took the company public last year in Germany's biggest flotation since 2000.

The company's shares were trading on Friday at €50.49, which gives it a market value of €7.6 billion ($8.7 billion).

The Samwer brothers hold a 41 percent stake through investment company Global Founders.

Rocket and its subsidiaries employ more than 25,000 people globally.

In the first six months of 2014, Rocket Internet lost €13.26 million. In 2013, it made a net profit of €174 million, but only after spinning off online shoe retailer Zalando, which listed separately last year.