Berlin / DE. (dhh) Following a press release by the Korea Fair Trade Commission (KFTC), Delivery Hero Holding S.E., the world’s leading local delivery platform, will receive conditional regulatory approval of its strategic partnership with Woowa Brothers Corporation (Woowa). Delivery Hero expects to receive the final written approval and closing to occur in the first quarter of 2021.
The transaction includes the establishment of a joint venture in Singapore. The transaction agreements were signed on December 13th, 2019, and the transaction has since been under review by the KFTC. As agreed at signing of the transaction in December 2019 and based on the then-agreed volume-weighted average price of the Delivery Hero share and valuation of Woowa, the consideration consists of both a cash and an equity component (approximately EUR 1.7 billion in cash and approximately 40 million in Delivery Hero shares). This corresponded to USD 4.0 billion, or EUR 3.6 billion, on a cash and debt free basis (before customary adjustments) at the time of signing, and prior to the share price development between December 2019 and closing.
Niklas Östberg, CEO and Co-Founder of Delivery Hero, said: «The approval of our partnership with Woowa is great news for both our companies and the broader delivery industry. We are thrilled to be one step closer to making this collaboration come to life and I’m particularly excited to welcome Bongjin Kim to our family of entrepreneurs upon closing. His team brings tremendous experience and together, we will be able to expand and enhance our presence across Asia. We are deeply saddened by the required condition to divest Delivery Hero’s subsidiary Delivery Hero Korea in South Korea. I want to personally express our gratitude to the team for all these years of collaboration and quest to create an amazing customer experience. We wish Delivery Hero Korea the best for the future, and will work hard to ensure that this transition is as smooth as possible for all impacted employees.»
Bongjin Kim, CEO and Founder of Woowa, said: «There is tremendous potential in the Korean food delivery market and we are very excited to partner up with Delivery Hero to benefit from their knowledge around logistics, technology, and scaling businesses. Our partnership will move the whole ecosystem forward, and we will work together to innovate the delivery industry in Asia.»
Local innovation supported by global insights
Woowa is at the forefront of innovative delivery platforms and has put Korea on the map within the global industry. Yet, the Korean online food delivery market is still in its early stages of development, and offers vast opportunities for growing both the customer base and expanding into adjacent on-demand services. Together with Woowa, Delivery Hero commits to develop new technologies that create opportunities for local entrepreneurs, enhance services for consumers, and increase job prospects for riders and restaurants.
Establishing a joint venture to foster innovation in Asia
The Singapore-based joint venture is expected to manage the operations of Delivery Hero in Asia (through the foodpanda brand in Bangladesh, Cambodia, Hong Kong, Japan, Laos, Malaysia, Myanmar, Pakistan, Philippines, Singapore, Taiwan, and Thailand) and of Woowa’s regional entities (in Korea, Vietnam, and Japan). Bongjin Kim, CEO and Founder of Woowa, will be appointed Chairman of the Board and Executive Director of the joint venture. Jakob Angele, current CEO of foodpanda Asia, and Sean Oh, current CFO/CSO of Woowa, will both be appointed Co-CEOs of the joint venture, taking care of the foodpanda and Woowa business units respectively. The joint venture will cover the operations of all Delivery Hero verticals of foodpanda and Woowa, such as own delivery, cloud kitchens, and quick commerce including Dmarts in Asia.
Remedies required for approval of the partnership
The regulatory approval is conditional upon structural and behavioural remedies on the South Korean subsidiary until the completion of the divestiture. The structural remedy requires Delivery Hero to divest 100 percent of Delivery Hero Korea LLC (including «Yogiyo»). The timeframe given for the divestment is six months from the date of which Delivery Hero will receive the written decision. Delivery Hero will be allowed to request an extension of the sale period for up to six months under certain circumstances.
The behavioural remedies are designed to maintain the status quo of Delivery Hero Korea LLC until the completion of the divestiture: a) separate and independent operations of Delivery Hero’s South Korean subsidiary Delivery Hero Korea LLC from Delivery Hero’s and Woowa’s other delivery apps, b) prohibition to any change in the actual commission rate applied to restaurants, c) monthly use of at least the same promotion amount used in the same month of the previous year and prohibition of discrimination, d) prohibition to change delivery app access or speed of connection, user interface, information provided, etc., and to coerced conversion, or solicitation to convert, to both parties’ other affiliated delivery apps, e) prohibition to disadvantageous changes to the working conditions of Yogiyo riders or soliciting them to Woowa, and f) prohibition to transfer and sharing of data.