South Korea’s antitrust regulator has recently ordered Berlin headquartered food delivery company, Delivery Hero, to sell its South Korean subsidiary, Yogiyo, in order to secure approval for its acquisition of Woowa brothers in a deal worth $4 billion that would have endowed the company with a near monopoly across the country’s food delivery industry.
Reportedly, the ruling announced by Korea Fair Trade Commission (KFTC) is an obstacle for the consolidation in world’s third-largest online food delivery market, however it was not clear at the moment if it will affect the deal considering the strong dominance of Woowa’s No. 1 app in the market even without the subsidiary.
As per credible sources, last year, Delivery Hero had agreed to buy Woowa, Korea’s top food delivery app for expanding its footprint in Asia’s rapidly growing market. Apparently, this buyout will offer it a lifeline in an immensely competitive market.
Speaking on the matter, the KFTC stated that it would give consent for the acquisition deal only if Delivery Hero sold its complete stake in Yogiyo in six months, with possible extensions. For the record, Yogiyo is the No. 2 food delivery app in the country.
Meanwhile, Joh Sung-wook, KFTC chief, stated that the sale of the unit is likely to ease concerns regarding diners paying extra under the present deal, while enabling a synergy which Delivery Hero claimed as a reason for the acquisition deal. The company stated that the purpose of this deal is to merge its logistics technology with the marketing ability of Woowa, which is sufficiently possible, Sung-wook added.
KFTC stated that the overall market share of the entity from the takeover, without selling the unit, would be 97% of food delivery transactions as of July. As per mobile big data platform IGAWorks, even without Delivery Hero subsidiary, Yogiyo, Woowa’s No.1 app had around 15.8 million monthly active users as of November representing 82% of monthly active users of all the food delivery apps available across South Korea.