Things are not going well with the proposed takeover of the British start bus platform Zeelo by Mass transit group Swvl. In April, we discussed how a potential $100 million acquisition was at stake, and both companies indeed confirmed that it was, although not the price.
Swvl, an Egyptian-born startup providing shared transportation services for intercity and intracity travel, had previously gone public through a SPAC (NASDAQ: SWVL) and agreed to acquire Zeelo, in addition to the recent acquisitions of Viapool and Shotl. . such as the announced acquisitions of Volt Lines and door2door.
When news of the acquisition fell, Swvl was trading at $9 to $10 a share. Today, however, it trades at barely $1 per share. Find the difference…
So today, Zeelo dropped the news that the acquisition has now ended, citing general market conditions and the obvious collapse of technology 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 mutually agreed to terminate the planned transaction.”
Similarly, in an SEC filing, Swvl Holdings Corp says it agreed to terminate their previously announced transaction, whereby Swvl would acquire Zeelo. Swvl previously funded a $5 million convertible promissory note to Zeelo, which the latter will now hold.
However, it sounds like it’s a smart move for Zeelo, who claims to see continued growth in its UK, South Africa and US operations, offering private rides for commuters and students in the corporate and education space.
Zeelo has raised $19.6 million to date from investors such as ETF Partners, InMotion Ventures and angels.
In an interview with co-founder and CEO Sam Ryan, I asked if the termination of the acquisition was a disaster for Zeelo.
“No, I don’t think it was a disaster,” he said. “I think market conditions have changed. We’re still in a great place, the business is growing very, very fast. And you know, now we’re shielded from what’s happening in the public markets.”
He said the two companies mutually agreed to terminate the transaction due to the collapse of the technical markets: “The deal that was agreed no longer made sense to the parties … not only in terms of the transaction, but also in terms of the growth opportunity … We couldn’t do that now.”
He added: “We are now in a great place. We are profitable in the UK, growing 1.5x again this year. We do 150,000 trips per month via EV. This is growing very fast, as there is a great opportunity in the US market. I think it’s not a bad thing to be somewhat shielded from the public markets. Obviously any process like this comes with a lot of ups and downs and it’s a real roller coaster ride. But everyone is very, very excited about what’s next.”
Recognizing the technical downturn, he added: “I think the world has changed incredibly quickly in recent months and sentiment around early stage public tech companies has changed dramatically. I’m not sure if any of us could have foreseen what was going to happen in the past few months or how serious it had been.”
At the same time, Zeelo announces that it has signed a deal with Zenobe, a provider of electric vehicle fleets and network infrastructure, to enable the former to operate on electric vehicles, thereby making a position contribution to its net-zero targets. (Zeelo says his travels are already 100% carbon neutral through a partnership with Climate Partner to support environmental recovery programs in Bulgaria and Uganda.)
Zenobe says it currently serves 25% of the UK bus market share and provides charging infrastructure, battery replacement, large scale battery storage and refurbished second-hand batteries. Zeelo already runs electric buses with its bus company partners on some routes.
James Basden, co-founder of Zenobe, commented: “We believe that access is the most important roadblock to the transition to electrification, so together with our partners such as Zeelo we have developed software, infrastructure and a financing model to drive sustainability directly into the company model of the transport sector.”
Zeelo’s transportation management software system consists of a SaaS platform, consumer apps that pick up employees or students wherever they are. It was founded in 2016 by Sam Ryan, Barney Williams and Daniel Ruiz and closed Series A in 2018. To date, it has raised more than $30 million from the likes of ETF Partners, InMotion Ventures and Dynamo. The co-founders previously sold their groundbreaking ride-sharing app JumpIn to Addison Lee in 2014.