Delivery Hero nears agreement to buy Woowa in a $4bn deal

The deal is among the biggest inbound investments into South Korea’s technology sector

(FILES) This file photo taken on June 27, 2017 shows a logo in a lounge area of the global headquarters of online food ordering and delivery giant Delivery Hero in Berlin. German takeaway giant Delivery Hero on December 13, 2019 said it had agreed to buy South Korea's largest food delivery app Woowa in a 3.6 billion euro ($4 billion) deal aimed at beefing up its presence in Asia. / AFP / John MACDOUGALL
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Delivery Hero will take control of South Korea’s biggest food delivery app, Woowa Brothers, at a $4 billion (Dh14.7bn) valuation in a major push into Asia.

Berlin-headquartered Delivery Hero will buy an 87 per cent stake in Woowa from the existing investors and the remaining 13 per cent held by Woowa’s senior management, including its founder Kim Bong-jin, will be converted into Delivery Hero shares, it said in a statement on Friday.

Delivery Hero will pay as much as $1.9bn in cash and up to $2.1bn in shares.

The deal makes yet another leg in the wave of consolidation sweeping the food delivery sector. Asia will become Delivery Hero’s biggest and fastest growing market, chief executive Niklas Oestberg said in an interview.

Woowa’s Mr Kim will now be Delivery Hero’s biggest shareholder on the management team, and he will hold a role on the company’s global advisory board. The firms will also establish a joint venture in Singapore.

“The main aim of this partnership is to leverage and support growth and expansion in Asia,” Mr Oestberg said.

“We see this transaction as an exchange of knowledge.”

Delivery Hero has been expanding outside of the hyper competitive European food delivery market.

Last year, sales from the Middle East and North Africa overtook Europe, accounting for nearly 40 per cent of revenue. Delivery Hero sold its German operations to last year.

The deal is among the biggest inbound investments into South Korea's technology sector, according to data compiled by Bloomberg.

Woowa Brothers, founded in 2010, had 36 million food-delivery orders in South Korea last month, according to the company. It counts Hillhouse Capital and Goldman Sachs as its early investors and among the biggest shareholders besides the management team.

Delivery Hero offers food delivery services in more than 400 cities globally with about 22,000 employees, according to its website.

As part of the deal, Woowa’s founder Mr Kim will be in charge of managing the Asian business including South Korea, Vietnam and Hong Kong.

Asia accounted for about 38 per cent of its total orders and around 32 per cent of its total revenue in the third quarter, according to its latest financial report.