Delivery Hero orders up South Korea’s Woowa for $4bn in world’s biggest food app deal

South Korea, with a dense population and high smartphone use, is the fourth-biggest market for online food orders.
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Updated 14 December 2019

Delivery Hero orders up South Korea’s Woowa for $4bn in world’s biggest food app deal

  • The deal, announced on Friday by Woowa, is the biggest global play so far for a food delivery app

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

The deal, announced on Friday by Woowa, 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 fourth-biggest 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 Inc’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 $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 $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 percent stake held by Woowa investors such as Goldman Sachs, Singapore fund GIC, Hillhouse Capital and Sequoia Capital. Delivery Hero will acquire the remaining 13 percent owned by Woowa’s management in the future, said a Woowa spokesperson, without elaborating on a timeline.

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 avs well as moving into Vietnam.

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.

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 is in talks to buy Just Eat in a transaction that values the latter at £4.3 billion ($5.52 billion), an offer that Dutch-based technology group Prosus recently topped.

For Delivery Hero, buying Woowa expands its presence in the fast-growing Asia market even as Europe becomes more competitive.

Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.