According to industry sources, Ola had been working on getting back into the food delivery business to compete against UberEATS, and that the acquisition of FoodPanda India is a step in that direction. The deal includes transfer of the Berlin-based company's India business to Ola in exchange for Ola stock, a press statement said. Pranay Jivrajka, founding partner at Ola has been appointed as the interim CEO of the new business unit.
To help kickstart that, Ola is pumping $200 million into Foodpanda India, which claims 12,000 restaurant partners in over 100 cities.
Without revealing much information on the recent deal, Ola said that Foodpanda India will be benefiting from its scale and efficiencies as a platform and will continue collaboration with Delivery Hero to build the online food delivery ecosystem in the country.
Foodpanda cofounder Rohit Chadda resigned subsequently with several senior management officials following suit.A slump in valuation, employee layoffs and talks of shutdown amid efforts to sell the food delivery firm in India did not make the ride any easier.
The flip-flop came as the food technology sector in India went through a struggle, amidst stiff competition and a funding crunch that saw many companies shutting down or trimming their businesses.
Foodpanda may have steadily lost ground to rivals Zomato and Swiggy, but it has been doing well of late.
The move signifies Ola's interest in the lucrative online food ordering market in India that is expected to grow at a compound annual growth rate of about 60 per cent over the next five years and hit a gross merchandise value (GMV) of $2.5-3.5 billion by 2021.
Foodpanda, previously owned by Germany's Rocket Internet, was sold to its larger rival Delivery Hero, last year, after the German firm chose to reshuffle its portfolio of businesses.
In 2014, Ola had forayed into the food delivery business with Ola Cafe and had expanded the offering to cities like Delhi, Mumbai and Bengaluru.
The platform, now available on both mobile (application) and desktop features over 15,000 restaurants from across 100 plus Indian cities, claims it has registered a profit on every order fulfilled and that it expects to be profitable in 2018-19. At the same time, we consider our stake in Ola as a very valuable asset, while Ola's investment commitment in Foodpanda India is a clear and confident signal to the Indian market. However, now Ola seems to be pursuing the traditional business model in its second attempt at food delivery.