Published: Sat, December 14, 2019
Markets | By Otis Pena

Delivery Hero to buy S Korea's Woowa Brothers for $4b

Delivery Hero to buy S Korea's Woowa Brothers for $4b

The deal was signed in Seoul on Friday to take over Woowa Brothers, the company behind South Korea's most popular food delivery app.

Woowa founder and CEO Kim Bong-jin said teaming up with Delivery Hero would allow it "to facilitate expansion in Asia, as well as to further penetrate the high potential Korean market".

Founded in 2010, Woowa's Baedal Minjok app has been the leading food delivery service in South Korea, the fourth largest market for online food orders in the world.

As per a report by the company, it had 36 million food-delivery orders in South Korea last month.

South Korea's online market for food delivery and pickup has more than doubled over the past five years to $7.7-billion - bigger than Japan and Germany's markets combined, and trailing only China, the United States and the United Kingdom, Euromonitor data showed.

Foreign investors in Woowa include Hillhouse Capital Group, an investment management firm, Sequoia Capital and the Government of Singapore Investment Corporation (GIC), Goldman Sachs and Altos Ventures, a first-stage venture capital firm based in Silicon Valley.

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Despite being ahead of Delivery Hero's app Yogiyo, which comes in second, Woowa said its decision to sell is a "survival strategy" as competition grows fiercer.

Delivery Hero and Woowa Brothers will also form a 50/50 joint venture, dubbed Woowa DH Asia, at Singapore.

"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.

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

The growing global food delivery trade has triggered deal-making, stock market listings and rising valuations.

For Delivery Hero, now worth almost 10 billion euros (S$15.1 billion) by market value, buying Woowa expands its presence in the fast-growing Asia market even as Europe becomes more competitive. "The deal will be beneficial to everyone including customers, restaurant owners and delivery riders as the companies will work harder to improve their quality".

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