Delivery Hero has acquired the Latin American operations of delivery player Glovo for up to €230 million ($272 million).
The deal is expected to close in the coming weeks and includes a €60 million performance-based earn-out.
Barcelona-based Glovo was founded in 2015 and has raised over $510 million from investors. It has grown into one of the major players in online food delivery, operating in dozens of markets globally including several countries in Central and South America. Its business also includes grocery delivery and a courier service.
The deal will see Germany’s Delivery Hero take over Glovo’s business in Argentina, Peru, Ecuador, Panama, Costa Rica, Honduras, Guatemala and the Dominican Republic. Delivery Hero has an existing presence in three of these countries.
While Glovo competes with Delivery Hero, the German company already owned a stake in Glovo before this acquisition.
Delivery Hero CEO Niklas Östberg said that Latin America is a market with high growth potential but it is also fiercely competitive with Uber and Softbank-backed Rappi heavily active in many countries, though it also holds a stake in the latter.
“Acquiring Glovo’s local operations gives us the opportunity to double down on our efforts to drive innovation, continuously improve customer experience and support local vendors in the region,” Östberg said. “We have been working closely with Glovo for many years, and are proud to incorporate their Latin American services into our global network.”
Glovo CEO Oscar Pierre added that selling off the Latin American business will allow Glovo “to strengthen our presence” in other markets.
“We feel that it’s important to focus on key markets where we can build a long-term sustainable business and continue to provide our unique multi-category offering to our customers,” Pierre said.
In a previous interview, Pierre said the company was pulling out of some markets that were underperforming. At the time, this included exits in Uruguay and Puerto Rico.
For Delivery Hero, the deal is a strategic move that it hopes will strengthen its position in another market. Announcing its last quarterly earnings, it said it was on track to be profitable in Europe this year.
The company, which recently joined the Dax index in Germany, expects to generate revenues of €2.8 billion ($3.3 billion) in 2020.