Post the acquisition of Runnr, Zomato may hive off its entire delivery business into a separate entity.

Zomato completes acquisition of Runnr with aim of boosting its delivery business
Atom M&A Thursday, September 14, 2017 - 08:58
Written by  S. Mahadevan

Food discovery and delivery platform Zomato has formally announced its taking over of the logistics and delivery startup, Runnr. This is limited to the Indian market, though Zomato has its operations in 24 countries. Runnr has around 1500 feet on street and they will now be expected to add to the delivery capabilities of Zomato.

Zomato’s Founder and CEO Deepinder Goyal points out that the 300, 000 odd deliveries per month made by Runnr currently, is just 10% of what Zomato handles.

He has also added that Zomato has ambitious plans for Runnr after the acquisition. This includes running the delivery business as a separate entity headed by one of the senior executives of Zomato, as the CEO and the entire delivery business of Zomato will be hived off to this subsidiary and carried to other geographies, like the UAE.

It has also been made clear that just delivering food and consolidating restaurant orders cannot be a fully viable business going ahead. Runnr will handle not only Zomato‚Äôs deliveries, but service their other customers as well.     

With regard to the value of this all-stock acquisition, Zomato has not disclosed the figure. Since the deal has been negotiated from the month of May’2017, there have been speculations in the media that the deal is worth $40million.

To bring the readers up to date on the two startups, Runnr itself has been formed following the merger Roadrunnr and Tiny Owl. They had also raised funds separately, before their merger; Roadrunnr is said to have raised around $28million and Tiny Owl, $27million. These funds came mainly from VCs and angel investors, numbering around 40. Reports indicate getting around these complications might have been one of the reasons Zomato took long to close the deal now.

Zomato, on the other hand, has already pulled in $120 million in investments and with this Runnr deal in the pocket the company’s valuation could be in the region of $800 (Around Rs 5120 Crore).

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