Germany’s Delivery Hero has agreed to buy Woowa Brothers, which operates South Korea’s largest food delivery app, in a US$4 billion deal.
Announcing the deal on Friday, Woowa said the sale was “a survival strategy” in an intensely competitive market, Reuters reports.
“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,” a spokesman was quoted as saying.
Under terms of the deal, Delivery Hero will acquire an 87 percent stake held by Woowa investors, a list that includes 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, according to the report.
The deal marks the biggest global play so far for a food delivery app, Reuters noted.
Established in 2010 as a food delivery firm, Woowa Brothers grew fast to become South Korea’s top online food delivery services firm, taking over 30 million orders per month.
The company has expanded into the business of provided shared kitchen space for restaurateurs, and also moved into Vietnam.
Founder and CEO Kim Bong-jin, 43, will head up a new joint venture with Delivery Hero, based in Singapore, to tap into the booming food delivery market in Asia.
For Delivery Hero, now worth nearly 10 billion euros (US$11 billion) by market value, buying Woowa expands its presence in the Asia market as Europe becomes more competitive, Reuters noted.
The company sold its German food delivery businesses to Takeaway.com last year in exchange for cash and an equity stake in the buyer.
South Korea, with a high smartphone penetration rate, is the world’s No. 4 market for online food orders, according to the report.
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