ISTANBUL Turkish delivery company Getir has bought German rival Gorillas in a deal worth $1.2 billion that will merge two of the remaining companies in Europe promising groceries in a matter of minutes.
Serkan Borancili, who founded Istanbul-based Getir in 2015, shared the price tag on Friday and said the combined company was stronger.
The deal price is down sharply from Gorillas' $2.1 billion valuation in its previous funding round in late 2021 - a sign that the sector has fallen out of favour as companies struggle to achieve profitability, join forces or fold.
The company said that Getir is leading the consolidation.
Gorillas didn't respond immediately to requests for comment. In Europe's quick commerce sector, the enlarged company will compete against Germany's Flink and U.S. company GoPuff, as well as larger meal delivery firms that also deliver groceries.
The deal valued the combined group at $10 billion, according to people familiar with the deal.
Getir closed a $768 million funding round earlier this year, led by Abu Dhabi state investor Mubadala, who valued the company at around $12 billion.
The FT said that job cuts were expected as part of the deal because of the overlap between the two companies' network of small urban warehouses.
Getir was one of the first firms to test the quick commerce model with venture capital backing from Sequoia and Tiger Global.
Gorillas, founded in 2020 with its slogan faster than you, was one of several other companies that ran with the idea during the COVID 19 lock-downs, opening offices in dozens of European capitals.
Its business tripled its sales in 2021, but it struggled to raise capital in early 2022 and laid off 300 people, halving its administrative staff. Before entering talks with Getir, the focus moved from rapid expansion to profit by 2023.
The FT report said that Getir is hoping to raise more funding early next year.
The model for fast grocery deliveries comes with high costs as companies have to pay couriers and rent space for distribution hubs in city centres in order to get items to customers quickly, such as pasta, milk, and other items.
The sector faces additional challenges in Europe as shoppers cut costs and a cost of living squeeze, according to analysts.