Delivery Hero acquires South Korea’s largest food delivery company for $4 billion

Delivery Hero, the Berlin-headquartered global food delivery giant (with significant operations across the Middle East & North Africa) is acquiring Woowa, the South Korean company that operates country’s largest food delivery app Baedal Minjok, it announced in a statement yesterday.

“The transaction is valued at an enterprise value of USD 4 billion (or €3.6 billion) on a cash and debt-free basis, before certain adjustments,” the statement noted. This is a little over one-third of Delivery Hero’s current market cap.

The German company is known for acquiring its competitors across different markets to fuel its growth and has also acquired different players in the Middle East & North Africa during the last few years, including Zomato UAE, Carriage, Talabat, HungerStation, and Otlob.

Korea that was the second best-performing market for Delivery Hero in terms of revenue in 2018 is now set to become its largest market overtaking Kuwait.

According to Delivery Hero’s statement, Woowa generated a revenue of $269 million (€242 million) with a GMV of $4.45 billion (€4 billion) and EBITDA of $51.15 million (€46 million). The Korean company that also operates in Vietnam grew revenues in Korea 84 percent YoY to ~$335 million (€301 million), GMV to $5.12 billion (€4.6 billion) and achieved EBITDA of $3.34 million (~€3 million).

For the sake of context, Delivery Hero’s total group revenue for 2018 was $665.1 million in 2018.

Woowa, according to a local publication had raised $432 million from Goldman Sachs, Sequoia, and some other investors, with $320 million coming in last year at a valuation of $3 billion.

Niklas Östberg, CEO of Delivery Hero, said, “We are excited to enter into a strategic partnership with Woowa Brothers, which is at the forefront of innovative technological services and has put Korea on the map in the global online food delivery industry. We fully support Woowa Brothers to continue making investments and innovate for the benefit of the wider industry participants, including consumers, restaurants, employees and riders. To this end, the joint venture will have the full support of, and access to, Delivery Hero’s global resources.”

Bongjin Kim, Founder and CEO of Woowa, who will continue to lead the company and will also manage the operations of the Delivery Hero group in the Asia Pacific region, said, “The Korean food delivery market is still in the very early stages of development, and offers vast opportunities to grow the customer base and expand into adjacent on-demand services. We are excited to partner with Delivery Hero to leverage their platform and global expertise to facilitate expansion in Asia, as well as to further penetrate the high potential Korean market.”

“The partnership will also help achieve economies of scale to effectively compete against global and domestic IT giants. Together we aim to cultivate and invest into development of online food delivery services for the benefit of consumers, restaurants, and riders,” he added.