Delivery Hero, the billion-dollar takeout food service based in Berlin, is making another big acquisition as it continues to scale up its business worldwide. It’s buying Turkey’s Yemeksepeti for $589 million in a cash and shares deal that will also see investor General Atlantic becoming shareholders in Delivery Hero.
Yemeksepeti — Turkish for “food cart” — is Delivery Hero’s first move into Turkey, and the deal is groundbreaking in another respect: the company claims it is the largest-ever acquisition in the food-ordering sector.
That’s saying something when you consider just how much activity the sector has seen.
Other significant M&A and funding moves in the takeout food space have included Seamless and GrubHub merging in 2013, a deal in which the price and respective company valuations were never disclosed.
A notable moment from earlier this year was when Rocket Internet — another Berlin-based e-commerce concern — invested $586 million in Delivery Hero, which in turn picked up nine smaller food-ordering startups to consolidate its position and has never specified the value of any of its several past acquisitions.
More recently, Postmates in the U.S. has been carving out a position for itself in food delivery, most recently signing up Chipotle in the U.S. and McDonald’s in New York, and with rival Sprig raising money, Postmates may also be in the market for more cash to grow.
Delivery Hero itself has raised $1.3 billion to date.
We pointed out back in 2013 how food-related startups picked up more than $350 million versus the less than $50 million it earned in 2008, and the amount of this latest Delivery Hero deal underscores how transaction sizes are still going up.
You might say that the sector’s growth is in direct variation with the number of people who eat all that takeout food. Yemeksepeti, which has been around for 15 years and is profitable, is processing more than 3 million orders each month, growing at 60 percent each year. That will account for a decent part of Delivery Hero’s wider business, which will altogether now process 10 million orders each month.
“We have looked at many businesses in our industry around the world but we have rarely seen KPIs as exceptional as those displayed by Yemeksepeti,” said Niklas Östberg, CEO of Delivery Hero. “Customer cohorts and reorder rates are among the best in the world and far superior to those shown by our listed peers.”
There is definitely an economy-of-scale play here. Yemeksepeti is based out of Turkey, but it also operates across the region, including the United Arab Emirates, Saudi Arabia, Lebanon, Oman, Qatar and Jordan, as well as e-Food.gr in Greece, which processes 300,000 orders monthly. This crosses over with markets where Delivery Hero is already active by way of its acquisition of Talabat.com in March 2015.
As part of the deal, Yemeksepeti’s CEO and co-founder Nevzat Aydin will continue to lead the division but also join Delivery Hero as a senior adviser for the wider business.
“We are very proud to have built a company that has changed the way people think and order food in Turkey,” he said in a statement. “During our 15-year history we have had many approaches from global and local investors however we were waiting for the right time and the right partner. Today, I am delighted to team up with a company whose global ambitions, corporate culture and way of doing business are so aligned with ours. “