Top delivery service apps join force to make foray into Southeast Asia

16, Dec. 2019

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SEOUL, AJU - In a major deal that could change the landscape of food delivery services, the operators of South Korea's two biggest food delivery service apps, Baedal Minjok and Yogiyo, joined hands through the acquisition of shares to make an overseas foray first into Southeast Asian countries, based on their advanced know-how the two rivals have accumulated through competition.

Delivery Hero (DH), a Berlin-based online food-delivery service which runs Yogiyo, agreed on Friday to acquire an 87 percent stake held by foreign and domestic investors in Woowa Brothers, the operator of Baedal Minjok. The remaining 13 percent held by Woowa CEO Kim Bong-jin and other executives will be converted later into a stake in DH's head office.

Details on financial terms were not given, but unconfirmed reports said that DH put Woowa's corporate value at $4 billion. It's not a unilateral deal as Baedal Minjok and Yogiyo will retain independent services and brand names at home in a strategy to increase consumer convenience while maintaining a competitive system. Woowa can be listed on the Frankfurt stock market in Germany.

The two companies agreed to set up an equally owned joint venture in Singapore. As one of DH's three global advisory committee members, Kim will head the joint venture and take charge of DH's businesses in 11 Asian countries.

They would create a $50 million innovation fund to support the development of domestic technology ventures in the food technology sector. Market research and consulting will be given when domestic restaurants make inroads into foreign markets.

Foreign investors in Woowa include Hillhouse Capital Group, an investment management firm, Sequoia Capital and the Government of Singapore Investment Corporation (GIC), Goldman Sachs and Altos Ventures, a first-stage venture capital firm based in Silicon Valley.

Baedal Minjok and Yogiyo have played a key role in expanding South Korea's delivery service app market. Their growth was attributable to the increasing number of single households and the busy lifestyle of young South Korean working class.

South Korea's food delivery service market is backed by some 200,000 deliverymen who use the transportation of motorcycles. Smartphone apps are used widely so that customers can order lunch boxes, salads and side dishes from local restaurants as well as food from special non-delivery restaurants. While many restaurants operate their own delivery workers, major online delivery services link their businesses with small and mid-sized delivery agencies to offer services around the clock.