Flink buys Cajoo in loss making mega merger

European instant grocery startup Flink has bought another fast grocery delivery startup, Cajoo. Cajoo is backed by French hypermarket chain Carrefour, which be investing in Flink as part of the tie-up.

Germany based Flink is backed by major fast delivery business Deliveroo. Its new acquisition will be rebranded as Flink by the end of the next quarter, and the combined company will then be France’s biggest fast delivery business in terms of reach and turnover.

While the two companies have not announced the financial terms of the deal, it is estimated the deal is worth between €90 and €100 million with an additional investment of €60m to €70m from Carrefour. An international media outlet estimates that the value of Flink would be €4.8bn from these figures.

“Cajoo has done an amazing job in leading the quick commerce revolution in France and building a loyal customer base,” said Oliver Merkel, co-founder of Flink, in a statement. “We are happy to join forces under the Flink brand to create the #1 player in quick commerce in France. At the same time, we feel privileged to enter an exclusive partnership with Carrefour to offer the best assortment at competitive prices to our customers.”

“The Cajoo story has been amazing,” said Henri Capoul, CEO of Cajoo, in a statement said with apparently very little irony given the young age of the company. “I am very proud of the whole team, for the value we have created together over the past 15 months to our customers. We are happy to find such great partners with the Flink team with whom we share common values, a similar vision on how to drive customer satisfaction and build a loyal customer base for sustainable growth for years to come. I am very pleased to see how the French tech ecosystem is building great companies, appealing to the best EU companies as today’s news shows that we are getting acquired by the fastest growing company in the European market.”

The deal is amazing for all the wrong reasons. Neither business is profitable and it can be seen that even the US giants in this segment are haemorrhaging venture capital money with no sign yet of any breaking even let alone into profit. A mega-merger of two badly loss-making companies still makes one big loss making company. Venture capital investment should be about making returns, and every penny from VC in this segment has disappeared in huge losses. Why then invest?

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