What's going on?
On Friday, pan-European food delivery platform Takeaway.com announced a deal to buy global rival Delivery Hero’s German business for $1 billion.
What does this mean?
Both companies do the same thing: offer websites and apps that help get food from (typically takeout) restaurants into the homes and bellies of hungry customers, while taking a cut of the restaurants’ cheque. Takeaway.com started in the Netherlands but soon expanded into Delivery Hero’s home turf of Germany – and the ensuing battle for supremacy has raged for years.
But the comestible combatants called a partial pax on Friday, as Takeaway.com agreed to buy Delivery Hero’s German business with a combination of cash and its own stock. The deal gives Delivery Hero a roughly 18% stake in its former foe.
Why should I care?
For markets: If you can’t beat ‘em, join ‘em.
German customers were able to get much the same food on multiple platforms. For them, using more than one was unnecessary – and that created fierce competition between the two companies. In the first half of 2018, mega marketing spend was partly to blame for Takeaway.com’s $24 million loss in Germany – and Delivery Hero’s $32 million loss across Europe. Halting the German campaign and its associated costs should save both companies money, partly explaining the rise in their stocks on Friday: Takeaway.com’s by 35% and Delivery Hero’s by 10%.
The bigger picture: Food for thought for Uber.
The combined business will likely be a more formidable match for Uber’s own food delivery platform in Germany. Uber Eats contributes an estimated 10% to 15% of the company’s roughly $11 billion 2018 revenue (tweet this). Having more than one string to its bow is key for Uber as it accelerates toward an initial public offering – and tries to pull ahead of its nemesis Lyft, which has its sights set on a 2019 listing of its own.