(Bloomberg) -- Gorillas Technologies GmbH is in exclusive talks to buy French delivery firm Frichti, a combination that would speed the German rapid grocery startup’s development of new business lines and mark further consolidation in the burgeoning sector.
Negotiations are ongoing, according to executives from both companies, who didn’t disclose specifics of a potential deal. A combined company would have the second-biggest market share for same-day grocery delivery in Paris.
Frichti and Berlin-based Gorillas focus on delivering groceries to consumers within 15 minutes as part of an industry that saw a rush of investment amid the pandemic.
Gorillas is among the better funded after raising about $1 billion from investors including Delivery Hero SE in October at valuation of roughly $3 billion.
Gorillas Chief Executive Officer Kagan Sumer said in an interview a key attraction of Frichti was its experience developing private-label lines and ready-to-eat meals.
“I will be happy if I can scale what I saw there across our geographies,” Sumer said. Quick commerce “is just an entry model, and after that there are other segments where you can go.”
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The deal would move Gorillas to a top position in the competitive French-speaking market. Frichti says it has more than 450,000 customers, serviced by about 25 micro-fulfillment centers across eight cities in France and Belgium.
A Nielsen study published last week suggests that with Frichti, Gorillas would have the second-largest share of same-day grocery deliveries in Paris, with a combined 17.1%, just ahead of Carrefour SA and behind leader Casino Guichard-Perrachon SA.
Other companies competing in rapid delivery in France include Cajoo, Gopuff and Getir.
Frichti launched in Paris in 2015 and focused on delivering ready-to-eat meals. It expanded into groceries in 2018. Then last year it started a line of 120 products under the Frichti Everyday label, including beer, biscuits, ham and eggs.
These products are typically more profitable and help even out the flow of customer activity, Frichti Co-Chief Executive Officer Julia Bijaoui said.
“It also allows us to have a business that works all day long,” she said. “Not only groceries at night, but also lunch at the office.”
Frichti will keep its own branding, she added.
While rapid-delivery startups proliferated during the pandemic as consumers sent sales surging during lockdowns, the delivery sector has begun to see mergers as investors become more hesitant to back such companies.
Philadelphia-based Gopuff has bought a couple of U.K. firms to grow its European presence, while Turkey’s Getir acquired another U.K. startup in November. DoorDash Inc. and Delivery Hero have also made major deals in recent months for delivery firms.
Frichti had raised about 100 million euros ($113 million) in total since its founding, Bijaoui said. Backers of the company include Alven Capital, Felix Capital and Verlinvest.
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