Germany's Delivery Hero has taken full control of its Saudi subsidiary HungerStation for $297 million, aiming to expand its presence in the Arab world's biggest economy and possibly further into the Middle East.
Delivery Hero purchased the remaining 37 per cent of all outstanding minority shareholdings in HungerStation Holding, the sole shareholder of HungerStation Company in the kingdom that operates its business, the Berlin-based company said on Friday.
The transaction price is “highly attractive”, considering that HungerStation generated revenue of about €609 million ($677.7 million) in its 2022 fiscal year, which was a growth of about 36 per cent, alongside posting positive earnings before interest and taxes, including group costs, of more than €50 million, it said.
“We believe in the kingdom of Saudi Arabia’s 2030 vision, ambition and potential, and are committed to contributing to its continuing success through HungerStation,” Niklas Ostberg, chief executive and co-founder of Delivery Hero, said.
“I look forward to continuing to build great products and delivering an amazing experience for our Saudi customers.”
Delivery Hero did not mention plans for expansion in the region.
Mr Ostberg was referring to Vision 2030, Riyadh's major economic programme that aims to diversify the kingdom's economy away from its reliance on oil.
The food delivery sector has steadily grown over the years as it affords consumers convenience and more choices right on their mobile devices. Restaurants and other food outlets have also used this to promote their brands and attract more customers.
Revenue in Saudi Arabia's online food delivery industry is projected to hit nearly $14.3 billion by 2027, from more than $10.02 billion in 2023, at a compound annual growth rate of 9.3 per cent, data from Statista shows.
The market's largest segment is meal delivery, with a projected market volume of about $8.83 billion in 2023, while the grocery delivery segment is expected to post revenue growth of 29 per cent in 2024, it said.
HungerStation is a major food delivery player in Saudi Arabia and Bahrain, with more than 20,000 partner restaurants, or about 65 per cent of the total, serving its customers, according to its website.
“Its strong position and reputation as a beloved local brand make it a valuable asset,” Delivery Hero said.
“Taking sole ownership will allow Delivery Hero to build stronger ties between HungerStation and the rest of its ecosystem, including greater opportunities for mutual knowledge sharing and tech integration.”
Delivery Hero, established in 2011, serves more than 70 countries across Asia, Europe, Latin America, the Middle East and Africa.
