Glovo’s Victor Racariu Talks About the Deal of the Year in Romania - Glovo's Acquisition of Delivery Hero's Operations in Bulgaria, Romania, Serbia, Bosnia & Herzegovina, Montenegro, and Croatia.
CEELM: First, congratulations on winning the Deal of the Year award in Romania!
Racariu: Thank you! This was a pretty big development for the local market.
CEELM: Can you describe the deal for us? How did it come about?
Racariu: The companies we acquired were part of the Delivery Hero group and they seemed relatively stagnant to us, in terms of growth in recent times, compared to the rest of the markets Delivery Hero operates in. We, therefore, decided to approach Delivery Hero to see whether they would be interested in selling. The entire deal was spearheaded from our Bucharest regional hub, here in Romania, which already ran our operations in the markets where the deals were going to take place.
Also, Romania was the biggest market, in comparison to the other ones we were aiming for, so it made sense from that end as well – if Romania went well, others would have had to follow.
CEELM: What made the target particularly attractive for you?
Racariu: I’m not quite sure how other M&A transactions pan out in other markets, but to us, this boiled down to a simple element – it made sense for Delivery Hero to sell, and it made sense for us to make the purchase.
On the one hand, when you look at the entire target portfolio size – there was a significant overlap with our operations, especially in terms of users, customers, partners, and cities that are operated. These similarities are what inspired us to move in. On the other hand, Glovo had a bigger share and a focus not just on food, but also on groceries, electronics, and other products – and we had a better-developed market for that, so that was the main difference.
CEELM: What would you say were the most complex aspects of the deal?
Racariu: People integration by far.
Looking at the deals themselves – Croatia was the only one that sold certain assets – we only bought the company and integrated the database, userbase, couriers, and the like. Other acquisitions were full, with us buying everything, including the teams.
Ultimately, it was the team merger that represented a challenge. Glovo had 150 employees, and we had 250 new employees joining as a result of the merger – we had call centers merging – all of the structures were large and quite independent, so accommodating for role overlaps was not easy. We managed to integrate approximately 95% of the team but had to cut the rest due to overlap. In any case, it was good to have a regional hub here. Given these merger complications, it made things easier.
As far as legal complexities – we needed to get approval from the competition authorities in Romania, other countries not being subject to concentration approval. Of course, we also had to engage in the due diligence process and other particularities. While I did not, personally, go through hundreds of pages of documents on that end, I did have to plead our case before the Romanian Competition Council.
The Competition Council presented an interesting challenge in its own right, as this was an entirely new industry for them. We collaborated with them on explaining what our business consists of, defining the size of the entities, the scope of the market, the particularities of the sector, etc. This was a challenging task for us as we had to bring clarity to our business model and sector and equally convince them that the merger would not harm the business environment in Romania – on the contrary: the cost of switching to other apps is zero for customers – they would, otherwise, quickly penalize us by moving to another app. Our industry is far less restrictive for users and, in our market, customers would simply download another app and that's it.
CEELM: How was the legal work on it split between your in-house legal team and that of your external advisors? And while at it, what were the considerations behind picking those firms specifically?
Racariu: While we usually rely on our in-house team for the day-to-day operations, for this particular deal we worked with a reputable external law firm because they had a strong presence in all of the markets we targeted.
So, it was a mixture of our internal legal team performing more of the project management duties and the external law firm team handling the specific countries. Our advisors had the biggest team, in terms of both experience and expertise, that could have a strong regional engagement for us on this acquisition.
CEELM: Why do you believe the judges voted for this deal over others in Romania?
Racariu: I think that the visibility of the industry is rather big. We interact with massive numbers of people on a daily basis – you can see couriers in the street everywhere – and it’s something you can connect with easily.
Also, the market itself is a big one – and the market share of all of the businesses, even pre-acquisition, was quite large, so it stands to reason that it attracted attention.
CEELM: In your view, what is the significance of this deal for the Romanian market?
Racariu: I believe that through this deal we are bringing additional added value to our ecosystem of users, partners, and courier service providers, as our growth means better services, content, and products for them.
CEELM: Can we expect other similar deals in the near future from Glovo? Why/Why not?
Racariu: Of this size – probably not. Smaller ones, however, I do not exclude as a possibility. We are always on the lookout for potential investments, even those that are non-core for our business, like various service companies and adjacent service providers.
This Article was originally published in Issue 9.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.