Online grocery app Getir just announced that it will acquire its German competitor 'Gorillas' for a $1.2 billion deal. This deal brings two European applications that benefited a lot during the pandemic.
(Photo : Chris McGrath/Getty Images)
ISTANBUL, TURKEY - OCTOBER 22: A Getir delivery rider leaves for a delivery from a store warehouse on October 22, 2021 in Istanbul, Turkey. The Turkey-based fast delivery service Getir is preparing to launch in the United States in November for the eighth country it has expanded to in one year.
ISTANBUL, TURKEY - OCTOBER 22: A Getir delivery rider leaves for a delivery from a store warehouse on October 22, 2021 in Istanbul, Turkey. The Turkey-based fast delivery service Getir is preparing to launch in the United States in November for the eighth country it has expanded to in one year.
Getir Acquiring Gorillas
Turkish online grocery app Getir announced a $1.2 billion acquisition deal with German competitor 'Gorillas', with the broader group at $10 billion. Based on a report from TechCrunch, this represents markdowns of 61% and 15% during their previous respective valuations.
According to Founder Nazim Salur, the consumers continuously support the two apps' services and enjoy the convenience they offer, which is enough reason for the company to continue this deal despite the markets going up and down.
This deal will be financed through Getir's equity and cash. Salur added, "The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago."
Although the app just became popular in the past two years, the company firstly launched its services in 2015. Consumers found that these types of markets were important, especially during the pandemic.
CNBC reported that the market for online groceries grew because of lockdown restrictions, which benefited companies like Getir, Gorillas, and Flink.
Gorillas' State
Now that almost everything is coming back to normal, a lot of grocery applications have already shuttered or have been closed, as per Financial Times. This leaves Germany's Getir and Flink, and US-based Go Puff as the last few surviving apps in the sector.
Independent Retail Industry Consultant Brittain Ladd stated that this acquisition is the last straw for Gorillas. The decision of the company to buy out Gorillas is more likely because of its dark stores and small facilities that house stock for online deliveries.
However, this might only be a short-term solution for Getir, as per Ladd. "Many countries have enacted laws or are enacting laws to shut down dark stores," he added.
Investors of Gorilla will be paid $40 million in cash. These include Delivery Hero, Coatue Management, Tencent, and DST. But looking at the drop in valuation, Gorilla investors will most likely be left with a small or no return on their investment.
This might also lead to possible job cuts, given the considerable overlap between the two companies' dark stores in London, Paris, Amsterdam, and Berlin.
Meanwhile, Getir investors (Mubadala Investment Company, Sequoia Capital, and Tiger Global) are hoping the best for the company to raise more funding early next year.
Last May, it was reported that two companies were forced to pause their plans to expand their services. Almost half of its workforce have been laid off, as the two companies searched for profits.
Getir reduced workforce by 14%, with 6,000 employees affected around the word. While Gorillas laid of 300 employees to focus on profitability instead of recruitments and expansions.
Followed by the layoffs, Gorillas also pulled out branches in Spain, Denmark, Italy, and Belgium.
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