All is not well with the proposed acquisition of the British bus platform Zeelo by the public transport group Swvl. Back in April, we covered how a potential $100 million acquisition was on the cards, and, indeed, both companies confirmed it was, but not the price.
Swvl, an Egyptian-born startup that provides shared transportation services for intercity and intracity travel, previously went public (NASDAQ: SWVL) through a SPAC and agreed to acquire Zeelo, adding to its recent acquisitions of Viapool and Shotl, as well as the announced acquisitions of Volt Lines and door2door.
When news of the acquisition broke, Swvl was trading between $9 and $10 a share. Today, however, it trades at barely $1 per share. Make the difference…
Today, Zeelo therefore announced that the acquisition is now complete, citing general market conditions and the obvious slump in tech stocks.
The April 28 acquisition was expected to close on May 24, and Zeelo says all pre-completion obligations have been met, but “following financial market volatility, Swvl and Zeelo have mutually agreed to terminate the transaction. planned”.
Similarly, in a filing with the SEC, Swvl Holdings Corp said it agreed to terminate the previously announced transaction whereby Swvl would acquire Zeelo. Swvl previously funded a $5 million convertible promissory note to Zeelo, which the latter will now retain.
However, the move appears to be a smart one for Zeelo, which claims to see continued growth in its business in the UK, South Africa and the US, offering private rides to commuters and students in the field of transport. business and education.
Zeelo has raised $19.6 million to date from investors including ETF Partners, InMotion Ventures, and angels.
In an interview with co-founder and CEO Sam Ryan, I asked if the completion of the acquisition was a disaster for Zeelo.
“No, I don’t think it’s a disaster,” he said. “I think market conditions have changed. We’re still in a great place, the business is growing very, very quickly. And you know, now we’re sheltered from what’s happening in the public markets.
He said the two companies had mutually agreed to end the transaction due to the collapse of technology markets: “The deal that was reached no longer made sense to the parties…not just in terms of the transaction, but also in terms of the growth opportunity… We couldn’t do any of that anymore.”
He added: “We are in a great place now. We are profitable in the UK, we are growing again by 1.5 times this year. We make 150,000 trips per month via EV. It is growing very fast, because there is a big opportunity in the US market. I don’t think being somewhat immune to public markets is a bad thing. Obviously, any process like this involves a lot of ups and downs and it’s a real rollercoaster. But everyone is very, very excited about what happens next.
Acknowledging the tech slowdown, he added: “I think the world has changed incredibly quickly over the past few months, and the sentiment around public tech start-ups has changed dramatically. I’m not sure any of us could have foreseen what was going to happen over the last few months or how bad it got.
Simultaneously, Zeelo announces that it has reached an agreement with the supplier of electric fleets and network infrastructure, Zenobe, to allow the former to make journeys on electric vehicles, with a consequent position contribution to its objectives of zero net. (Zeelo says its trips are already 100% carbon neutral thanks to a partnership with Climate Partner to support environmental regeneration programs in Bulgaria and Uganda.)
Zenobe says it currently serves 25% of the UK bus market share, providing charging infrastructure, battery replacement, large-scale battery storage and refurbished second-life batteries. Zeelo already operates electric buses on certain lines with its bus operator partners.
James Basden, co-founder of Zenobe, said: “We believe that access is the main obstacle to the transition to electrification and that is why we have developed software, infrastructure and a financing model with our partners like Zeelo to embed sustainability directly into the business. transport industry model.
Zeelo’s transport management software system includes a SaaS platform, consumer applications that select workers or students where they are. It was founded in 2016 by Sam Ryan, Barney Williams and Daniel Ruiz and closed its Series A in 2018. So far it has raised over $30 million from ETF Partners, InMotion Ventures and Dynamo, among others . The co-founders previously sold their pioneering ride-sharing app JumpIn to Addison Lee in 2014.