Delivery Hero buys majority stake in Glovo

Glovo starts 2022 with a significant change in its shareholding that implies a new stage in which it will lose its independence. On New Year's Eve, the ultra-fast home delivery company announced that several of its reference shareholders have reached an agreement with Delivery Hero to sell an additional 39.4% stake in the capital in exchange for shares of the German listed group, which becomes the majority shareholder of Glovo. This acquisition, according to Reuters, values Glovo at 2.300 million euros.

Delivery Hero was already Glovo's largest shareholder ---it held two positions on its board of directors--- owning around 44% of the shares after having provided a good part of the funds from the last financing round raised by the Barcelona-based company. Thus, Delivery Hero will come to control a majority stake of 83% in Glovo, although this stake may increase, as a period of time will now open for the remaining shareholders to adhere to the agreement. According to Delivery Hero, the closing of the transaction is expected to occur in the second quarter of 2022, although it is subject to prior approval by the competition authorities of different countries.

"The Delivery Hero team has admired and supported Glovo for many years. They have pioneered the industry by offering a multi-vertical service from the beginning. Their focus on product and rapid execution has given them a leading position in 16 of the 25 markets where it operates, despite having launched several years later than its peers. We will continue to invest in Glovo's team and product, and we see many opportunities to further improve its operations with our resources and experience," explained Niklas Östberg, CEO and co-founder of Delivery Hero.

For his part, Glovo founder, Oscar Pierre, stated that "Glovo's potential is untapped," which is why he feels "happy to have found a partner that matches our ambition, culture and will continue to support this adventure we have embarked on to further drive innovation, strengthen our multi-category offering and create additional value for all our stakeholders and for this industry as a whole."

According to the German group, Delivery Hero and Glovo "share the same vision from day one": to offer all citizens easy and fast access to any product available in their city, in all types of categories, from restaurants to pharmacies, including grocery stores and supermarkets and any retail trade. Both companies also highlight their geographical complementarity, as there are no market overlaps. The combination of both groups will allow serving a potential population of 2.2 billion people, of which Glovo contributes 700 million.

With an organic growth rate of 80% in 2021 and 800 million euros in revenue, Glovo operates in more than 1,300 cities in 25 countries in Europe, Central Asia and Africa, with 15 million active users annually and 70,000 monthly couriers making their deliveries.

For its part, Delivery Hero is an ultra-fast home food delivery platform with a presence in 50 countries in Asia, Europe, Latin America, the Middle East and North Africa. Headquartered in Berlin, the company was founded in 2011 and has been listed on the Frankfurt Stock Exchange since 2017, with a market capitalization of 24,587 million euros.

It so happens that in May 2021, Delivery Hero sold its business in several Central and Eastern European countries, such as Romania and Bulgaria, Serbia or Croatia, to Glovo. Previously, at the end of 2020, Glovo had transferred its subsidiaries in Latin America to Delivery Hero for 230 million.

In March 2021, Glovo closed the largest investment round in its history (Series F) by raising 450 million euros, of which Delivery Hero contributed 229 million and the rest was subscribed by funds such as Lugar Road Capital, Luxor Capital, Drake Enterprises, GP Bullhound and Mudabala. The Catalan startup was already a unicorn ---emerging technology companies valued at more than one billion--- since 2019, joining a select club in Spain to which until then only Cabify belonged.

"I started Glovo in 2015, right after university, and it seems incredible to me how technology can have such an impact in such a short time. We have changed the way millions of users get their local products and manage their time in a city. We are creating a new online opportunity for local merchants and providing income opportunities for couriers who work with our platform. With the markets we cover today, we can serve a total population of more than 700 million people," says Oscar Pierre.

Delivery Hero assures that after the closing of the transaction, Glovo will maintain its brand and its technological platform and will continue to be led by the current management team, with the two co-founders (Oscar Pierre and Sasha Michaud) at the helm, as "they will continue to invest in Glovo and together with Delivery Hero, they will leverage shared technology to further improve efficiency and accelerate product development."

J.P. Morgan has acted as financial advisor and Cuatrecasas as legal advisor to Delivery Hero, while Morgan Stanley and Latham & Watkins have been the financial advisor and legal advisor, respectively, to the selling shareholders. In parallel, the law firm Uría Menéndez has advised Glovo. According to the buyer, new details of the operation will be announced on January 11.