Ninja–HungerStation deal may reshape Saudi delivery market: Analysts

Logo of Ninja 

Saudi quick-commerce startup Ninja has emerged as one of the top bidders for Delivery Hero's assets, after the Financial Times reported that it is studying the acquisition of HungerStation in Saudi Arabia, in addition to its interest in stakes in Talabat.

The newspaper explained that Ninja is focusing on HungerStation due to the ease of integrating its operations, while sources told Asharq TV that the company is working with several investment banks to complete the potential transaction.

These developments come at a time when Delivery Hero owns 100% of HungerStation and an 80% stake in Talabat, amid reports indicating shareholder interest in transactions that could value the two assets at around €10 billion.

According to analysts surveyed by Argaam, the potential deal could represent a significant transformation in the delivery and quick-commerce market in the Kingdom, bringing opportunities for growth and expansion alongside challenges related to financing, operational integration and regulatory approvals.

High strategic value

Samer Hassan, an analyst at XS.com, said preliminary indicators suggest a deal between Ninja and HungerStation has high strategic value for expanding Ninja’s pricing and service range in the Saudi market.

Samer Hassan, an analyst at XS.com

The deal could contribute to a qualitative leap in Ninja’s combined market share, with recent estimates indicating that its total share of the Saudi delivery market could rise to between 60% and 70% after completion of the deal. The potential move could also enhance the company’s valuation, estimated at about $1.5 billion, he added.

Delivery app and marketing specialist Jamal Al-Fadhli said that HungerStation is the best-known platform in the restaurant-delivery market and possesses competitive advantages that make it the preferred choice for a wide segment of customers.

Delivery app and marketing specialist Jamal Al-Fadhli

He highlighted that Ninja is known for its delivery speed and that combining the two companies would create a differentiated value proposition for customers that would be difficult for competitors to match, noting that the economic value lies in delivering higher value to customers at a lower cost than competitors.

Acquisition cost and profitability

Hassan said that the deal’s financial success depends mainly on the final acquisition cost and the ability to reduce operating expenses. “Delivery Hero shareholders have received offers of around €10 billion for these assets, making the success or failure of the transaction dependent on Ninja’s ability to avoid overpaying,” he continued.

He also highlighted that another factor is the efficiency of integrating technological and logistics systems without sacrificing profitability, as managing profit margins and delivery costs will directly determine the combined entity's future cash flows.

Al-Fadhli explained that the entry of major competitors into the bidding process could raise the company’s valuation, while customer acquisition costs (CAC) would decline after the deal's completion, as each party would benefit from the other’s customer base.

Ninja’s profit margins could increase thanks to HungerStation's margins, helping the company reach breakeven more quickly, he added.

Financial and operational capabilities

According to Hassan, Ninja is among the fastest-growing technology companies after joining the unicorn club, with a $1.5 billion valuation. The company has successfully raised nearly $250 million from local investors, although it may require additional financial partnerships given the multi-billion-dollar valuations being sought for Delivery Hero’s regional assets.

He said that Ninja has a strong infrastructure for online stores in the Kingdom, which facilitates integration, adding that its focus on HungerStation rather than Talabat may reduce initial operational and regulatory risks.

Al-Fadhli said that Ninja is a unicorn company with a valuation exceeding $1.5 billion and is preparing for an IPO, which could provide substantial liquidity to support the acquisition.

Similar to global moves

Hassan clarified that the deal resembles moves by global delivery companies seeking to build super-apps that combine food delivery and shopping, noting that the trend parallels attempts by companies such as Uber and DoorDash to boost the efficiency of their delivery networks through acquisitions.

“The key difference lies in the nature of the integration between quick commerce and food delivery. Globally, food-delivery platforms usually acquire quick-commerce companies, whereas in this case, Ninja is leading an attempt to acquire an established delivery platform,” he added.

Al-Fadhli pointed out that Uber’s acquisition of Careem in 2019 aimed to gain market control and end price wars.

HungerStation could benefit in a similar way by reducing marketing burn and strengthening market share, he said.

He further stated that the difference is that Uber was a global company acquiring a local company, whereas the Ninja–HungerStation deal represents a local company attempting to acquire an asset owned by a global company.

Redrawing the competitive landscape

Hassan said the deal will likely redraw the competitive landscape of the delivery and digital commerce sectors in the Kingdom, explaining that Ninja’s acquisition of HungerStation could create an entity difficult to compete with.

This could push competitors to seek alliances or new mergers, while investment and technology support in Saudi Arabia may facilitate the entry of new competitors in the future, he added.

Al-Fadhli said that the merger would reshape the market and make it more stable, while potentially eroding competitors’ market shares and making it harder for new players to enter because of disparities in capabilities.

An attractive strategic asset

Hassan said that HungerStation is an ideal choice for Ninja thanks to its large customer base and extensive logistics network, providing rapid access to an integrated ecosystem of customers and restaurants without having to build it from scratch.

Acquiring HungerStation may face fewer regulatory obstacles than other opportunities in the region, said Hassan, adding that operational integration between the two companies would be easier.

Al-Fadhli explained that HungerStation possesses one of the largest databases in the restaurant-delivery market, whether in terms of customers, service providers, or delivery drivers, making it an attractive strategic asset.

Enhancing Ninja’s attractiveness

Hassan said that the deal could bolster Ninja’s attractiveness ahead of an initial public offering (IPO) and strengthen its position with international investors, while the investment return will depend on the new entity’s ability to achieve sustainable profit margins and reduce shared operating costs.

Al-Fadhli added that successful integration and repayment of financial obligations would positively affect investment returns and sustainable growth.

Revenue growth and market share

Hassan stated that judging the success of the deal after five years will depend on combined revenue growth, sustainability of profits and operating margins, maintaining market share, and achieving a successful IPO.

He added that failed operational integration, a decline in the customer base, ongoing regulatory disputes, or continued high cash burn could turn the transaction into a financial burden on the new entity.

Al-Fadhli concluded that the deal would be considered successful if customers could order groceries and meals through a unified experience, simplifying the customer journey and increasing profitability by lowering delivery costs per order.