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Mail.ru Group acquires Rocket Internetís Russian food delivery business for $100 million

Today Mail.ru Group, a leading, LSE-listed Russian Internet company, announced the acquisition Delivery Club, the number one food delivery company in Russia owned by Rocket Internetís Foodpanda

Nov 10, 2016
The Russian group is acquiring 100% of Delivery Club for $100 million in an all cash transaction, with 90% of the amount to be paid in November and the remaining part in early 2017 for the remaining 10% of Delivery Club.

The deal is not subject to any third party approvals, stated Mail.ru Group, which will fully consolidate Delivery Club.

"While Mail.Ru Group has the lead in the Russian mobile space, the acquisition of Delivery Club further enhances our mobile offering. The Food delivery market continues to show steady growth and the combination of our network, resources and expertise with the leading market position of Delivery Club will allow us to take this business to even further success," Mail.ru Group Chairman and co-founder Dmitry Grishin commented.

"Transitioning our business to Mail.Ru Group, a local internet market leader, allows foodpanda to focus more on the expansion in the Asian, Middle Eastern and Eastern European markets, solidifying and expanding our leading market positions," stated Ralf Wenzel, founder and CEO of Foodpanda Group.

Founded in 2012, Foodpanda has focused primarily on emerging markets, and operates under different brands in some regions, such as Hellofood in Africa, Latin America, and the Middle East, notes VentureBeat.

Early fundings and acquisition

Pioneering the Russian online food delivery business, Delivery Club raised $400,000 in 2009, followed by $1 million from AddVenture and prominent Russian businessmen in 2011, and another $4 million in a round led by AddVenture in 2012.

The Russian startup completed its fourth round of financing in December 2013, with $8 million secured from Phenomen Ventures Ė which also invested in Foodpanda Ė as well as from existing investors AddVenture and Guard Capital.

In June 2014, Delivery Club was taken over by Rocket Internetís Foodpanda and its affiliated brand Hellofood. The size of the transaction remained undisclosed, but the Russian media reported that it stood at around $50 million.

Delivery Club is now the leading player in the growing Russian food delivery market. The company claims that it has over 4,500 connected restaurants and generates 20,000 orders per day. The Delivery Club mobile app accounts for over 72% of these orders.

In H1 2016, Delivery Clubís net revenues reached 296 million rubles (a little more than $4 million at the average exchange rate for that period). The business was "broadly EBITDA neutral," Mail.ru Group indicated.

Among the other recent moves on the Russian online food delivery market were, this past summer, the acquisition of a stake in ChefMarket.ru by Mitsui; and a $1 million funding round for Foodfox.ru. This round was led by Target Global, an international fund with Russian backers which had previously invested in related businesses Blue Apron, Delivery Hero and Lemoncat.