Home Personal Finance Delivery Hero orders up South Korea’s Woowa for $5.4b in world’s biggest...

Delivery Hero orders up South Korea’s Woowa for $5.4b in world’s biggest food app deal, Companies & Markets News & Top Stories

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SEOUL (REUTERS) – Germany’s Delivery Hero has agreed to buy South Korea’s top food delivery app operator Woowa Brothers for $4 billion (S$5.4 billion) and form a joint venture to take on heavyweights like Uber Eats in other fast-growing Asia markets.

Founder and chief executive officer Kim Bong-jin, 43, will head up the newly formed joint venture with Delivery Hero, based in Singapore, to tap into the booming food delivery market in Asia. Regional players like Singapore-based Grab and Indonesia’s Gojek are already well implanted.

Established in 2010 as a food delivery firm, Woowa Brothers – ‘woowa’ means elegant in Korean – grew fast to become the country’s top online food delivery services firm, taking over 30 million orders per month, and expanded into the business of provided shared kitchen space for restaurateurs as well as moving into Vietnam.

The deal is the biggest global play so far for a food delivery app, one of the hottest tech sectors around. Woowa said the sale was “a survival strategy” in an intensely competitive market and also the biggest deal involving a South Korean internet firm.

South Korea, with a dense population and a high smartphone penetration rate, is the world’s No 4 market for online food orders. A huge jump in the number of single people living on their own is also propelling the boom in food delivery services.

Delivery Hero’s Yogiyo app ranks second behind Woowa’s Baedal Minjok, but the sector leader faces stiff competition from rivals such as e-commerce firm Coupang, backed by Japan’s deep-pocketed SoftBank Group. Uber Technologies’s UberEats restaurant delivery business pulled out of South Korea earlier this year, reflecting the intensity of competition.

“The (food) delivery market has been flooded with gigantic Japan-backed capital and influential online platforms, leading Woowa to factor in partnership as a survival strategy,” said a spokesman at Woowa Brothers.

South Korea’s online market for food delivery and pickup has more than doubled over the past five years to US$5.9 billion – bigger than Japan and Germany’s markets combined, and trailing only China, the US and the UK, Euromonitor data also showed. Euromonitor expects the South Korean market to jump to US$9 billion by 2023.

It wasn’t immediately clear whether the deal between the two leading players in the market would face antitrust hurdles.

Under terms of the deal, Delivery Hero will acquire an 87 per cent stake held by Woowa investors such as Goldman Sachs, Singapore fund GIC, Hillhouse Capital and Sequoia Capital. Delivery Hero will acquire the remaining 13 per cent owned by Woowa’s management in the future, said a Woowa spokesperson, without elaborating on a timeline.

The growing global food delivery trade has triggered a wave of dealmaking and rising valuations.

The purchase of Britain-based Just Eat is set to top the Delivery Hero-Woowa deal: Dutch firm Takeaway.com is in talks to buy Just Eat in a transaction that values the latter at £4.3 billion (S$7.8 billion), an offer that Dutch-based technology group Prosus recently topped.

For Delivery Hero, now worth nearly 10 billion euros (S$15 billion) by market value, buying Woowa expands its presence in the fast-growing Asia market even as Europe becomes more competitive.

It sold its German food delivery businesses to Takeaway.com last year in exchange for cash and an equity stake in the buyer.



Straitstimes News

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