South Korean food delivery unicorn startup Woowa Brothers announced Dec. 13 that German food delivery giant Delivery Hero will acquire a majority stake in the company at a $4 billion valuation.
Berlin-based Delivery Hero will buy 87 percent of Woowa Brothers, known for its online delivery app Baedal Minjok. As a result of the transaction, venture capitals such as Hillhouse Capital, Altos Ventures, Sequoia Capital, Goldman Sachs and GIC are expected to exit from the startup.
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Delivery Hero will carry out a share swap for the remaining 13 percent Woowa stake, owned by Woowa board members including CEO Kim Bong-jin. As a result, Woowa will be wholly owned by Delivery Hero, while the Woowa board will be granted shares of Delivery Hero, trading at the Frankfurt Stock Exchange. Kim will become the biggest individual shareholder of Delivery Hero after the share swap.
A detailed timeline for the closing of the deal has yet to be determined, on possibilities that the deal might be subject to antitrust hurdles, according to Woowa.
Woowa also announced that it would create a joint venture in Singapore with Delivery Hero to oversee the entire Asia-Pacific operation of the two companies.
The joint venture, Woowa DH Asia, will name Kim of Woowa as its chairman. Delivery Hero will hold its 50 percent stake plus a share.
Delivery Hero has a presence in 11 Asian countries including Malaysia, Singapore, Thailand and the Philippines. Woowa operates in Korea and Vietnam.
The move will also ramp up Delivery Hero’s presence in Korea, where it operates Baedal Minjok’s Korean food delivery industry rivals Yogiyo and Baedaltong.
Woowa said the move comes in the face of the rise of Asian contenders. Competition in online food delivery has heated up as SoftBank-backed e-commerce platform Coupang has launched a food delivery service, called Coupang Eats, and ride-hailing platforms Uber and Grab respectively run Uber Eats and GrabFood.
Woowa also cited room for domestic market growth as the reason for integration with Delivery Hero. In Korea, nearly 90 percent of people order food with a phone call, whereas only 6.4 percent place delivery orders on mobile apps, according to the Korea Rural Economic Institute.
By Son Ji-hyoung (firstname.lastname@example.org)