H-E-B Buys Austin-based Favor

Jag Bath, president and CEO of Favor, photo by John Davidson.

Favor, the startup delivery service based in Austin, just got bought by one of the largest retailers in Texas, San Antonio-based H-E-B.

Under the deal, Favor will become a wholly-owned subsidiary of H-E-B and it will continue to operate as a separate brand led by Chief Executive Officer and President Jag Bath and all of Favor’s employees and its 50,000 runners will remain. The financial terms of the deal were not disclosed.

“I am thrilled to have H-E-B join forces with another well-respected and innovative Texas company,” Martin Otto, H-E-B’s Chief Operating Officer, said in a news release. “We share similar values, including a commitment to excellence in customer service and to our greatest resource – our people. Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies. We see a unique opportunity with this partnership to support and accelerate each other’s growth through the sharing of experience, insight and resources.”

Last September, Favor announced the company had reached profitability and raised $22 million in venture funding. The startup, founded in 2013, operates in 50 cities in Texas. To date, Favor raised $37.9 million in venture capital, according to CrunchBase.

“We could not be more excited to be part of H-E-B,” Bath said in a news release. “I am incredibly proud of our team’s success and the business we have built at Favor. H-E-B’s extensive resources, capital and retail food industry experience will enable us to further build on our momentum and significantly accelerate our growth throughout Texas.”

H-E-B, with $25 billion in sales, has been making a big push into the grocery delivery business. The company already offers HEBtoYou, a home grocery delivery service. The company also offers “Curbside Pickup” at more than 100 of its stores. H-E-B operates 400 stores in Texas and Mexico.

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