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.

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 13 min 36 sec ago

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.