Mumbai: Ola, the cab hailing app, on Tuesday re-entered the domestic food delivery space when it announced the acquisition of Foodpanda's India business from Germany's Delivery Hero in an all-stock deal.
Besides, the SoftBank-backed company has committed investments to the tune of $200 million in the Foodpanda India business, which is the largest such funds infusion in an Indian online food ordering and delivery company till now.
Under the deal, Foodpanda's India business will be transferred to Ola in exchange of the latter's stock, Ola said in a statement. It, however, did not divulge details about the the number of shares that will be part of the transaction.
In 2014, Ola, owned by ANI Technologies, had forayed into the food delivery business with Ola Cafe and had expanded the offering to cities such as Delhi, Mumbai and Bangalore. However, Ola Cafe was later shut down.
The competition has been intense in the segment with the likes of Sequoia Capital-backed Zomato and Swiggy, backed by Naspers, competing aggressively to capture the market.
It heated up further after the entry of UberEATS - the food delivery service of Ola's rival Uber - in the Indian market a few months ago.
UberEATS delivers in about half a dozen Indian cities, while Foodpanda is present in more than 100 cities.
According to industry sources, Ola had been working on getting back into the food delivery business to compete with UberEATS and that the acquisition of FoodPanda India is a step in that direction.
Ola said Foodpanda India will benefit from its scale and efficiencies as a platform and it will continue to collaborate with Delivery Hero on building the online food delivery ecosystem in India.
Saurabh Kochhar, who was the CEO of Foodpanda India until recently, has decided to move on to pursue other opportunities.
Ola founding partner Pranay Jivrajka has been appointed as the interim CEO of this business unit, supported by the existing leadership team at Foodpanda India.
"I'm excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. Our commitment to invest $200 million in Foodpanda India will help the business be focused on growth..," Ola co-founder and CEO Bhavish Aggarwal said.
Niklas Östberg, CEO and co-founder of Delivery Hero AG, said the partnership will allow it to further consolidate markets. "At the same time, we consider our stake in Ola as a very valuable asset," he added.
Foodpanda has over 15,000 restaurants across 100 Indian cities on its platform.
Its revenue stood at Rs 62.16 crore in 2016-17 compared with Rs 37.81 crore in the previous fiscal, on the back of a strong growth in orders in key markets.
Its losses declined 69 per cent to Rs 44.81 crore in 2016-17 from Rs 142.64 crore in 2015-16. The company had said it aimed to be profitable by 2019.
The online food delivery market in India is expected to grow more than six fold to $750 million this year from about $120 million in 2015, according to a report by consultant RedSeer.
