Delivery Hero sells off German operations in €930m deal

The world's biggest online food delivery firm Delivery Hero has agreed to partially sell its operations in Germany to Dutch rival Takeaway.com, in a deal valued at €930m (£838.3m).

The tie-up includes businesses owned by Delivery Hero in the region, including Deliveroo-style app Foodora, Lieferheld and Pizza.de.

It brings to an end the expensive battle for dominance of the German takeaway market between the two firms, in which both firms spent heavily to build market share.

Takeaway's chief Jitse Groen said the acquisition "allows Takeaway.com to operate on a significantly larger scale, which is essential in building a profitable online food delivery business".

"There is still ample growth ahead, given that penetration of online food delivery in Germany is amongst the lowest in Europe," he added.

Groen said he expects the takeover to double Germany's annual food delivery orders online to 47m.

Previously, Takeaway.com had said it would turn a profit on earnings before interest, taxes, depreciation and amortization (EBITDA) by the third quarter of 2019. Delivery Hero, meanwhile, has also yet to turn a profit despite operating in the Americas and Asia as well as Europe.

Takeaway will pay €508m in cash, while Delivery Hero will also receive 9.5m shares, worth €422m, giving it an 18 per cent stake in the company.

The deal, which needs to be approved by shareholders and is expected to close in the first half of next year, could create over €60m in cost savings within two years for Takeaway.

The company has committed debt financing of €680m for the cash portion of the transaction, which it said it might refinance through the issuance of new shares in the future.