Grocery delivery app pioneer Getir is in talks to take over its heavily lossmaking rival Gorillas, according to people familiar with the deal, as investor sentiment cools on one of the pandemic’s hottest tech trends.
Getir and Gorillas entered into exclusive negotiations in recent days and the start-ups intended to close the acquisition by the end of next month, the people said, although due diligence is still at an early stage and the deal might yet fall apart.
Shareholders in Berlin-based Gorillas would receive $100mn in cash as well as stock worth 12 per cent of the combined entity, in a rescue deal that is likely to value the company far below the $2.1bn price tag it was given by investors a year ago.
Getir and Gorillas declined to comment on the talks, which were first reported by Bloomberg.
The deal would combine two of the most prominent start-ups to expand across Europe over the past two years; each invested heavily in marketing and promotions to build their brands and win over customers to a new way of buying daily essentials.
Istanbul-based Getir and Gorillas were among the first companies promising to deliver a range of groceries and convenience goods in as little as 10 minutes, from a network of small warehouses or “dark stores” dotted around a city.
But while these delivery apps saw rapid growth during pandemic lockdowns, that has proven harder to sustain in 2022, especially as competition emerged from existing food delivery apps such as Uber and Deliveroo, in addition to well-funded US player GoPuff arriving in Europe.
Getir’s valuation jumped to $11.8bn in March, when it raised almost $800mn in new funding, even as share prices of publicly listed food delivery companies such as Deliveroo and Just Eat Takeaway.com were declining. The round left Getir — which counts Sequoia Capital, Mubadala and Tiger Global among its investors — as one of the best-funded players in a market that was already starting to consolidate, despite rapid delivery apps in the US and Europe raising billions of dollars during 2021.
Gorillas was valued at $2.1bn just over a year ago, when Delivery Hero invested $235mn, joining existing investors including Tencent, Coatue and DST.
But as investors’ appetite waned over the course of this year for lossmaking ecommerce start-ups, Gorillas has been frantically searching for a buyer before it runs out of funds.
The company had talked to several companies about selling some or all of its business before discussions about a full buyout became more serious with Getir earlier this month, people familiar with the situation said.
After raising more than $1.3bn to build out a network of more than 100 “dark stores” across Europe and into the US, Gorillas has already been forced to pare back its footprint and cut hundreds of staff over recent months. Getir cut staffing by 14 per cent in May.
Several smaller rapid delivery apps have already been forced to sell or pivot their business models. Last year, Getir acquired UK-based Weezy while US-based Gopuff bought Dija and Fancy and invested in Germany’s Flink. Gorillas acquired Frichti in France earlier this year.