Delivery Hero Buys Food Delivery App Baemin in US$4 bln Deal

Andrew Cummings
December 14, 2019

The latest deal? Berlin-based Delivery Hero agreed to buy South Korea's Woowa Brothers for $4 billion.

Founded in 2010 by CEO Kim Bong-jin, Woowa is South Korea's biggest food delivery platform, racking up some 30 million orders a month. "The deal was aimed at fulfilling Baemin's business philosophy to provide good food anywhere amid challenges posed by global tech giants increasingly entering the business", an official from Woowa Brothers said.

A detailed timeline for the closing of the deal has yet to be determined, on possibilities that the deal might be subject to antitrust hurdles, according to Woowa. Woowa said the sale was "a survival strategy" in an intensely competitive market and also the biggest deal involving a South Korean Internet firm.

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

The stake is now owned by various investors and private equity groups such as Goldman Sachs, Hillhouse Capital, and Sequoia Capital, as well as Singapore's sovereign wealth fund GIC.

The two companies also signed a partnership to establish a 50 to 50 joint venture named Woowa DH Asia that will be led by Kim to manage delivery businesses of 11 Asian nations in which DH has operations.

Delivery Hero is a publicly listed company worth nearly US$11 billion, and operates in more than 40 countries globally.

Shares in Delivery Hero jumped more than 16 percent to 58.22 euros by mid-morning on Frankfurt's mid-sized MDAX index on news of the Woowa acquisition.

"While Woowa Brothers has been expanding in South Korea as a local company with a kitsch marketing strategy which exactly suits South Korean taste, it will be necessary for the firm to have more local views and strategies which suit South-east Asian consumers", said Jade Lee, an analyst at research firm Euromonitor.

Delivery Hero has risen to become one of Germany's most successful start-ups since it was founded in 2011.

The delivery hero will initially acquire 82% of Woowa before taking full ownership "over time", he said in a statement.

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