On May 13th Uber Eats ( $UBER (-2,15%) ) announced its intention to acquire Delivery Hero’s ( $DHER (-1,03%) ) Foodpanda delivery business in Taiwan.
The agreement was for Uber to acquire Delivery Hero’s foodpanda delivery business in Taiwan for $950 million in cash plus $300 million in newly issued ordinary shares of Delivery Hero.
But the deal has been blocked by Taiwanese Fair Trade Commission. Their statement goes as follow:
"If Uber acquires Foodpanda, it will be completely unrestrained by competition,"
"The disadvantages to market competition from this merger far outweigh its economic benefits.,"
"The merged companies' market share would exceed 90 %."
"No corrective measures could sufficiently ensure competition would be maintained".
Following the news in May $DHER (-1,03%) stock went up like a rocket while $UBER (-2,15%) stock was unaffected (slightly down on that day).
At the moment, over 70% of Taiwanese are considered to be food delivery users signaling a very mature market where only two players have emerged as winners. Foodpanda controls about 51% of the market while Uber Eats about 47%.
Delivery Hero has made its intention to sell operations in selected Southeast Asian countries very clear. Competition, being too stiff, puts too much pressure on pricing and the path to profitability.
In 2023 Asia contributed more than half of $DHER (-1,03%) ’s gross merchandise value (GMV). However, this dominance is not because of Foodpanda.
Instead, the credit goes to South Korea’s Baedal Minjok, which Delivery Hero acquired in South Korea and accounts for 60% of the Asia’s GMV. Baedal Minjok is a delivery platform developed by Woowa Brothers Corp. Woowa Broter's acquisition was set at 4 billion.
Asia is one of the most developed Delivery market and growth is quite limited. So further consolidation to increase margins makes sense.
Now that this deal is off the table it remains to be seen how Delivery Hero plans to exit Taiwan.
For a deeper understanding of Taiwanese Food Delivery industry you can have a look at these 3 articles:
