Delivery Hero will sell its South Korea-based food delivery app Yogiyo as part of the conditions for getting regulatory approval on its $4 billion deal to buy Woowa Bros., which owns the country’s largest food delivery service Baedal Minjok. Final written approval on the deal is expected to happen in the first quarter of 2021, according to an official announcement from Delivery Hero.
The Korea Fair Trade Commission (KFTC) flagged the deal in November over concerns about its impact on competition in South Korea’s fast-growing food delivery space. Were Delivery Hero to hang onto Yogiyo, the combined user bases of that app plus Baedal Minjok’s would have given Delivery Hero 97 percent of the marketshare in South Korea. KFTC approved the Woowa Bros. deal on the condition that Delivery Hero offload the entirety of its own South Korea business.
Delivery Hero cofounder and Chief Executive said in a statement that his company was “deeply saddened by the required condition to divest Delivery Hero’s subsidiary.” However, Delivery Hero will nonetheless sell off Yogiyo within six months, per KFTC’s terms.
Even with the requirement to sell 100 percent of its stake in Yogiyo, Berlin-based Delivery Hero will access a massive user base with the purchase of Woowa Bros.: roughly 15.8 million monthly active users, or 82 percent of the marketshare in South Korea.
The South Korean food delivery market, meanwhile, is the world’s third largest, behind China and the U.S. Coupang Eats, backed by Softbank-owned e-commerce company Coupang, is the country’s third largest player, and will be Delivery Hero’s chief rival going forward.
Delivery Hero has six months from the time it gets written confirmation of regulators’ decision to complete the sale of Yogiyo.