Online food delivery service Just Eat has agreed to acquire its nearest competitor in the UK, HungryHouse, in a deal that could be worth as much as £240 million.
The company will buy HungryHouse from German company Delivery Hero Holdings for an initial £200 million – but that could rise to £240 million, subject to the performance of HungryHouse between signing and completion of the transaction.
Just Eat said that the move will “create an enlarged customer base for restaurant partners to access, while increasing the breadth of choice on offer to UK consumers through Just Eat’s platform”. It expects HungryHouse to generate pre-tax earnings of between £12 million and £15 million next year
HungryHouse only operates in the UK, but has traditionally been Just Eat’s closest competition in the country’s £5.5 billion takeaway industry.
The deal represents the latest step in Just Eat’s policy to aggressively pursue growth through acquisitions around the world, while also consolidating its position in markets where it has enjoyed lower penetration.
The company agreed to acquire four food delivery businesses in Brazil, Mexico, Italy and Spain in February for a combined value of €125 million, before selling its Belgian and Dutch operations for €22.5 million in August.
Its business in Belgium and the Netherlands, the Telegraph reported, barely broke even in the last financial year, while HungryHouse – facing competition from app-based providers such as Deliveroo – made a £4 million loss in 2014.
David Buttress, chief executive officer of Just Eat, said: “The UK has long been an engine of growth for Just Eat. While we have significantly expanded internationally in recent years, we have remained focused on building a high-growth, sustainably profitable business domestically. Through this transaction, we would extend our market presence in the UK and sustain high levels of growth given the considerable opportunity in this market.”
Delivery Hero CEO Niklas Östberg added: “The sale of HungryHouse to Just Eat rationalises our global footprint, and we remain focused on operating market leading brands, globally. Proceeds from this sale will allow us to pursue further global growth and profitability opportunities, as we have consistently and successfully done in recent years. We also want to thank the entire HungryHouse team – this transaction reflects their amazing achievements within the Delivery Hero Group since 2011.”
Delivery Hero will retain its operations in Scandinavia, northern Europe, much of South America and the Middle East.
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