German food delivery group Delivery Hero said it signed an agreement to buy an additional 39.4 per cent stake in Spain's delivery app Glovo, making it the majority shareholder in the company.
The deal is expected to close in the second quarter of 2022, subject to relevant regulatory approvals, Delivery Hero said in a statement on Friday. Delivery Hero currently holds about 44 per cent interest in Glovo on a non-diluted basis.
"We will continue to invest in Glovo’s team and product, and see many opportunities to further enhance their operations with our resources and expertise," Niklas Ostberg, chief executive and co-founder of Delivery Hero, said.
"Their product focus and fast execution have given them a leading position in 16 out of 25 markets, despite having launched a number of years later" compared to its peers.
With demand for at-home deliveries surging during the Covid-19 pandemic, Delivery Hero has invested extensively in food delivery and in so-called quick commerce, which aims to deliver goods in as little as 10 to 15 minutes. The company, which operates in about 50 countries in Europe, Latin America, Asia, the Middle East and North Africa, is the parent company of food delivery service Talabat.
Under the terms of the agreement, Delivery Hero will acquire the additional stake in Glovo, on a non-diluted basis, in exchange for Delivery Hero shares.
Glovo has a run-rate of approximately €3 billion ($3.41bn) in gross transaction value, an annual organic growth rate of 80 per cent in 2021 and €800 million in revenue, according to the statement. It operates in 1,300 cities in 25 countries across Europe, Central Asia and Africa.
"With the markets we cover today, we can serve a total population of more than 700 million people," said Oscar Pierre, chief executive of Glovo.
"Our potential is untapped, and I’m happy to have found a partner that matches our ambition, culture and will keep supporting this adventure we’ve embarked on to drive innovation further, strengthen our multi-category offering and create additional value for all our stakeholders, and the industry,"
Glovo will continue operations with its current platform and brand, under the existing management team, Delivery Hero said.
JP Morgan was the financial adviser and Cuatrecasas the legal adviser to Delivery Hero on the transaction. Morgan Stanley was appointed the financial adviser and Latham & Watkins as legal counsel for the selling shareholders. Uria Menendez was the legal counsel to Glovo.