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Zomato sells UAE operations, more consolidation expected in the market

Zomato sells UAE operations, more consolidation expected in the market

Zomato’s UAE delivery business will be operated by Talabat, a subsidiary of German firm Delivery Hero Group

Indian online food delivery website Zomato has sold its UAE delivery business to German firm Delivery Hero Group.

The transaction was valued at $172m, according to Indian media reports.

Zomato’s UAE business will now be operated by Talabat – a wholly-owned subsidiary of Delivery Hero.

The acquisition will add 1.2 million monthly orders and $2m monthly revenue to Delivery Hero’s Middle East and North Africa business, a statement said.

Delivery Hero has also agreed to invest $50m into Zomato’s global business, marking the German company’s second attempt at entering the Indian food-delivery market. The company sold its stake in TastyKhana to Foodpanda in 2014.

Niklas Östberg, CEO of Delivery Hero, said: “Zomato has built a successful food delivery business in the UAE and India on the back of its restaurant search and discovery app and website.

“The acquisition will allow us to further improve our service to customers in the UAE. We are also excited to become a shareholder in Zomato’s rapid food delivery growth story in India and share our learnings.”

The UAE’s food delivery sector is seeing strong competition with several players including Deliveroo, Uber Eats, and Talabat.

Last month, ride-hailing app Careem acquired RoundMenu, which has operations in more than 90 cities across 13 countries.

Careem said would begin trialling food delivery services through the restaurant listing and reservation online platform.

Read: Careem acquires online restaurant listing platform, to trial food delivery

“This latest acquisition which comes close on the heels of Careem’s acquisition of RoundMenu proves that delivery players are increasingly looking at organic and inorganic options to grow their businesses in the UAE,” said Anurag Bajpai, partner and head of Retail, KPMG Lower Gulf.

The UAE’s food delivery witnessed “significant growth”, both at the industry level and as a channel for operators, according to KPMG’s latest 2018 F&B report.

It also expects more operators to have a presence on multiple food delivery apps as a way to boost performance.

“This may likely also result in a further increase in competition amongst the delivery apps, which is expected to lead to better terms of pricing and commissions for the restauranteurs, as well as improved service and experience for consumers,” said Bajpai.

“At the same time, increased competition will potentially drive further consolidation in the UAE market. We also expect to see convergence of services as delivery apps adapt to consumer needs by offering discounts and restaurant reservations in addition to traditional deliveries.

“Along with delivery through food apps, delivery kitchens will also remain key growth drivers for operators, which will give momentum to the industry in 2019,” he added.

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