Germany’s Delivery Hero makes giant bet on growth in Asia, buys South Korea’s Woowa for $4 billion

Update (16 January 2020): Delivery Hero has raised €2.3 billion to finance its acquisition of Woowa

While, Prosus and Just-Eat are involved in a (rather vicious) consolidation battle, Germany-born rival Delivery Hero hasn’t been sitting still. The company is making an giant bet on Asia by acquiring South Korea’s top food delivery app operator Woowa for about $4 billion on a cash and debt free basis.

The Singapore-based joint venture aims take on heavyweights like Uber Eats in Korea, and other fast-growing Asia markets.

Delivery Hero is expected to achieve 100% ownership in Woowa over time for a total consideration of approximately €1.7 billion in cash and about €1.9 billion in shares.

The Berlin-based company has also committed to a $50 million tech investment fund “to support innovation in Korea and the rest of Asia”…”to develop and cultivate innovative online food delivery services for the benefit of consumers, restaurants, employees and riders.”

Founded in 2010, Woowa currently operates the largest online food delivery service in South Korea, Baedal Minjok, which generated approximately 100 million orders in the last full quarter of this year.

In the first nine months of 2019, Woowa booked revenues in Korea of around €300 million,
with an EBITDA of ~€3 million. The market is still nascent and expected to grow fast, the companies said; Woowa is also active in Vietnam.

Woowa founder and CEO, Bongjin Kim, will become the Chairman of the Board of Directors and Executive Director of the new joint-venture to manage the operations of Delivery Hero in the Asia Pacific region and oversee expansion in the region.

As usual, the closing of the transaction is subject to certain conditions – including financing and regulatory approvals – and is expected to occur in H2 2020.

Niklas Östberg, CEO of Delivery Hero, commented:

“We are excited to enter into a strategic partnership with Woowa Brothers, which is at the forefront of innovative technological services and has put Korea on the map in the global online food delivery industry. We fully support Woowa Brothers to continue making investments and innovate for the benefit of the wider industry participants, including consumers, restaurants, employees and riders. To this end, the joint venture will have the full support of, and access to, Delivery Hero’s global resources.”

Curiously, Baedal Minjok and Delivery Hero’s local brands will continue to operate separately and independently in Korea following the transaction closing.

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