Bite Squad, the Minneapolis-based food delivery company, has been gobbling up similar firms for two years.
But on Wednesday, it was purchased by one of the nation's wealthiest restaurateurs in a $321 million deal that is one of the biggest on the Minnesota tech scene in years.
Bite Squad became the second app-oriented food-delivery firm bought this year by Texas billionaire Tilman Fertitta, owner of the Houston Rockets and Landry's Inc., the restaurant and entertainment company that includes Golden Nugget casinos, steakhouses and chains like Bubba Gump Shrimp Co. and Rainforest Cafe.
Fertitta made the deal through a special acquisition company he listed on Nasdaq two years ago that last month took the identity of his first big food-delivery purchase: Waitr, a Louisiana company that competed with Bite Squad in five states.
Now called Waitr Holdings Inc., that firm is purchasing Bite Squad with $202.1 million in cash and 10.6 million Waitr shares priced at Tuesday's closing value of $11.26. After the deal was announced, Waitr shares rose 2 percent Wednesday. The deal is expected to close by the end of January.
Bite Squad will continue as a stand-alone business and brand for the foreseeable future, and its team of more than 100 Twin Cities employees will remain, the company said.
"We are thrilled to join forces with the Waitr team," Kian Salehi, co-founder and chief executive of Bite Squad, said in a statement.
Salehi and Arash Allaei started the company in 2012 and received investments from Brightstone Venture Capital of Minneapolis in 2015 and Bregal Sagemount of New York in 2017.
The duo for several years built operations organically in the Twin Cities and five other markets.
They were one of the first food-delivery specialists to offer real-time tracking technology similar to Uber's. Over the past two years, Bite Squad went on a buying spree, purchasing about 40 small food-delivery firms.
Bite Squad now provides delivery service from more than 11,000 restaurants in 18 states. Waitr operates in nine states, and the two firms overlap in Arkansas, Florida, South Carolina, Tennessee and Texas.
"We have followed Bite Squad's growth and success for many years and believe their mission, business model and growth profile share many similarities to Waitr," Chris Meaux, chief executive of Waitr, said in a statement.
Waitr and Bite Squad together generated $145 million in gross food sales and revenue of $41 million in the July-through-September quarter, Meaux said. Both figures were more than twice their year-ago levels.
He said company executives believe the food-delivery industry is still young. "There's a lot of underpenetrated markets still out there. … This gives us a national footprint to really get to those markets more quickly," Meaux said.
Fertitta for years dismissed the prospects of the food-delivery firms. But when he agreed to buy Waitr in May, he said he had been "converted."
"You wanna be the Pac-Man and eat up all the small companies and see what happens," Fertitta told CNBC at the time. "We're going to be in the acquisition mode. We want to eat up a lot of the competition. "
Nicole Norfleet • 612-673-4495 Twitter: @nicolenorfleet
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