Delivery Hero, the Berlin-based owner of online food and grocery delivery company foodpanda, is reportedly discussing a potential sale of its Asia business. The deal is reportedly still under negotiation but it was reported that tech platform Grab could pay the equivalent of as much as a billion euros for the unit.
Why Delivery Hero wants to sell its Asian business
Delivery Hero has been focusing on reaching profitability while maintaining growth as investor confidence in the company started to wane after a pandemic-driven boost. The group has said that it reached an adjusted profit before interest, tax, depreciation and amortisation (EBITDA) in the first six months of the year, although it did not quantify it, after a loss of 323 million euros in the same period a year earlier.
Last month, Chief Executive Niklas Oestberg said that Asia was the segment where the company saw the most opportunity to invest. However, he also said that the company was open to partnerships and divestments if they made sense strategically and financially.
By selling part of its Asian business, Delivery Hero could free up some cash to invest in other markets where it faces more competition, such as Europe and Latin America. It could also reduce its exposure to regulatory risks and operational challenges in some Asian countries.
What Delivery Hero plans to sell and what it will keep
According to a statement by Delivery Hero, the company plans to sell its activities under the foodpanda brand in Singapore, Cambodia, Laos, Malaysia, Myanmar, the Philippines and Thailand. These are the markets where Grab operates its food delivery service, GrabFood.
Delivery Hero will retain its presence in other Asian markets, such as Japan, Hong Kong, Taiwan, Bangladesh, Pakistan and South Korea. It will also keep its stake in Woowa Brothers, the operator of South Korea’s largest food delivery app Baedal Minjok.
Delivery Hero acquired foodpanda from Rocket Internet in 2016 and expanded its footprint in Asia through several acquisitions and investments. In 2018, it bought Zomato’s food delivery business in the United Arab Emirates. In 2019, it invested in Rappi, a Colombian delivery app that operates in several Latin American countries. In 2020, it bought Woowa Brothers for US$4 billion.
How Grab could benefit from the deal
Grab is one of the leading tech platforms in Southeast Asia, offering services such as ride-hailing, food delivery, e-commerce, digital payments and financial services. It operates in eight countries: Singapore, Malaysia, Indonesia, the Philippines, Thailand, Vietnam, Myanmar and Cambodia.
Grab has been expanding its food delivery business as part of its strategy to become a super app that offers multiple services to its users. It competes with other players such as Gojek, Foodpanda and Deliveroo in the region.
By acquiring part of Delivery Hero’s Asian business, Grab could strengthen its position in the food delivery market and gain access to more customers, merchants and delivery partners. It could also leverage Delivery Hero’s technology and expertise to improve its service quality and efficiency.
Grab has been preparing for a US listing through a merger with a special purpose acquisition company (SPAC) called Altimeter Growth Corp. The deal is expected to value Grab at about US$40 billion and raise about US$4.5 billion for the company. The deal is subject to regulatory approvals and is expected to close by the end of this year.
