Swvl’s $100M Acquisition of Smart Bus Startup Zeelo Fails as Tech Stocks Fall

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Not all is well with the proposed acquisition of Britain’s Zeelo bus launch platform by public transport group Swvl. Back in April we coated as on the cards there was a possible acquisition for $100 million, and indeed both companies have confirmed this, although not the price.

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Swvl, an Egyptian-born startup that provides shared transportation services for intercity and intracity travel, previously went public (NASDAQ: SWVL) through SPAC and agreed to acquire Zeelo, adding Viapool and Shotl to its recent acquisitions, as well as the announced acquisition of Volt Lines and door2door.

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When the acquisition became known, Swvl shares were trading at $9 to $10 per share. Today, however, it trades at just $1 a share. Find the difference…

So today Zeelo dropped the news that the acquisition is now discontinued, citing general market conditions and an apparent decline in technology stocks.

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The April 28 acquisition was expected to close on May 24, and Zeelo says all commitments prior to completion have been met, but “following financial market volatility, Swvl and Zeelo have mutually agreed to terminate the planned transaction.”

Likewise in filing with the US Securities and Exchange CommissionSwvl Holdings Corp says it has agreed to end a previously announced deal that would see Swvl acquire Zeelo. Swvl previously funded a $5 million Zeelo convertible promissory note, which the latter will now keep.

However, the move seems prudent for Zeelo, which says it sees continued growth in its business in the UK, South Africa and the US, providing private rides for commuters and students in the corporate and educational space.

To date, Zeelo has raised $19.6 million 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 are still in excellent condition, the business is growing very, very fast. And you know, now we’re protected from what’s going on in the public markets.”

He said the two companies had mutually agreed to terminate the deal due to the collapse in technology markets: “The deal that was agreed no longer made sense to the parties… not only in terms of the deal, but also in terms of growth opportunities… We would more couldn’t do any of that.”

He added: “Now we are in a great place. We are profitable in the UK, this year we are growing 1.5 times again. We make 150,000 trips a month with electric vehicles. This is growing very fast as there is a big opportunity in the US market. I think it’s not a bad thing to be protected from the public markets to some extent. Obviously, any process like this has a lot of ups and downs, and it’s a real roller coaster. But everyone is very, very excited about what’s to come.”

While acknowledging the tech downturn, he added: “I think the world has changed incredibly fast in the last few months and attitudes towards public early-stage tech companies have changed dramatically. I’m not sure that any of us could have foreseen what was going to happen in the last few months or how serious it was.”

Simultaneously, Zeelo is announcing that it has struck a deal with EV and network infrastructure provider Zenobe to allow the former to manage EV journeys, which, as a result, contributes to achieving zero goals. (Zeelo says its travels are already 100% carbon neutral thanks to a partnership with Climate Partner to support environmental restoration programs in Bulgaria and Uganda.)

Zenobe says it currently serves 25% of the UK bus market with charging infrastructure, battery replacement, large scale battery storage and refurbished second life batteries. Zeelo already uses electric buses on some routes with its partner bus operators.

James Basden, co-founder of Zenobe, commented: “We believe that access is a key barrier to the transition to electrification and that is why we have developed the software, infrastructure and funding model together with our partners like Zeelo to bring sustainability right into the business. transport industry model.

Zeelo’s transportation management software system includes a SaaS platform, consumer applications that pick up workers or students from where they are. It was founded in 2016 by Sam Ryan, Barney Williams and Daniel Ruiz and closed Serie A in 2018. It has raised over $30 million so far from ETF Partners, InMotion Ventures and Dynamo, among others. In 2014, the co-founders sold their innovative ride-sharing app JumpIn to Addison Lee.

Credit: techcrunch.com /

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