GERMANY – German online food ordering and delivery marketplaces, Delivery Hero has signed an agreement to form a strategic partnership with South Korea’s leading online food delivery platform, Woowa Brothers Corp. in a US$4 billion deal.
The Transaction will reinforce Delivery Hero’s ambitions of expanding into the fast-growing Asian market while solidifying its position as the largest global food delivery platform, outside of China by number of orders.
Woowa operates the largest online food delivery service in South Korea, Baedal Minjok, which generated approximately 100 million orders in Q3 2019, according to a statement from the company.
As part of the transaction, the Delivery Hero will establish a joint venture with the management of Woowa in Singapore in which Woowa founder and CEO, Mr. Bongjin Kim, will become the Chairman of the Board.
Kim will also become an Executive Director of the joint venture to manage the operations of the Delivery Hero group in the Asia Pacific region and oversee expansion in the region.
The transaction is valued at an enterprise value of US$4.0 billion (€3.6 billion) on a cash and debt free basis, before certain adjustments.
Delivery Hero said that it expects to achieve full ownership in Woowa over time for a consideration of approximately a US$1.9bn in cash and US$2.1bn in shares.
At closing of the transaction, Delivery Hero will own up to 88% of the share capital in Woowa with the remaining 12% to be held by Woowa management and to be exchanged in Delivery Hero shares over a four year time horizon, to achieve the 100% ownership.
Niklas Östberg, CEO of Delivery Hero, commented: “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, CEO and Founder of Woowa, 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.”
The closing of the transaction is subject to certain conditions including financing and regulatory approvals and is expected to close in second half of 2020.