Rappi, the popular food delivery platform, has recently announced its plans to acquire Box Delivery, a Brazilian company that specializes in swift food delivery to large restaurants and retailers in the region. Although the precise amount of the transaction has not been revealed, it is understood that the deal will be made through a combination of cash and shares. The acquisition, however, is subject to approval from Brazil’s antitrust authority, Cade.
Box Delivery, which reportedly generated BRL 200 million (equivalent to USD 39.4 million) in sales last year, is seen as an attractive target for Rappi due to its experience and success in serving large restaurant chains and retailers in Brazil. Nonetheless, it remains to be seen whether the deal will pass regulatory scrutiny.
This move comes on the back of a recent consent decree imposed by Cade on iFood, the dominant player in the Brazilian food delivery sector. The decree limits iFood’s exclusivity with restaurants to just 25 percent of its partners, thereby opening up the market for other players like Rappi to compete more effectively. Although some have speculated that Rappi’s acquisition of Box Delivery was prompted by the decree, Rappi’s co-founder and president, Sebastián Mejía, has denied this, stating that the negotiations with Box Delivery were already underway before the decree was announced.
Nevertheless, Mejía praised Cade for its efforts to promote healthy competition in the food delivery sector, and expressed optimism about the future of the market. Rappi CEO, Tijana Jankoic, also lauded the consent decree, describing it as a positive step towards curbing monopolistic practices that had hurt the sector in the past. She added that the agreement had encouraged Rappi to renew its focus on investments in Brazil.
The Brazilian food delivery sector has been marred by allegations of monopolistic practices and exclusive agreements between food delivery platforms and restaurants. In response, other players in the market, including Uber and 99, as well as the Brazilian Association of Bars and Restaurants, had lodged legal representations with the authorities, requesting investigations into these practices. Uber, however, pulled out of the Brazilian food delivery market in March 2022 due to the high level of competition.
The acquisition of Box Delivery by Rappi is therefore seen as a strategic move that could enable Rappi to gain a stronger foothold in the Brazilian market, especially in the wake of regulatory changes aimed at promoting healthy competition. Although it remains to be seen how the regulatory authorities will respond to this move, industry watchers will be keeping a close eye on developments in the sector in the coming months.
