Delivery Hero has agreed a $4bn (£3bn) deal to purchase South Korea’s biggest food delivery app and form a joint venture, driving up competition in the rapidly-growing Asian market.
The Berlin-based group today signed a deal to take over Woowa Brothers, the startup behind the Baedal Minjok app – more commonly known as Baemin.
The deal is the largest in the world so far for a food delivery app, one of the most competitive corners of the tech sector.
“The Korean food delivery market is still in the very early stages of development, and offers vast opportunities to grow the customer base and expand into adjacent on-demand services,” said Woowa founder and chief executive Bongjin Kim.
Kim said the partnership would “help achieve economies of scale to effectively compete against global and domestic IT giants”.
Under the deal, the joint venture between the two takeaway firms will have the “the full support of, and access to, Delivery Hero’s global resources,” said the German company’s chief executive, Niklas Ostberg.
South Korea is the world’s fourth largest market for online food orders, with a huge jump in the number of single people living alone driving a food delivery boom.
Delivery Hero’s Yogiyo app ranks second in the country behind Baedal Minjok, which is facing stiff competition from rivals influence Coupang, which is backed by Japanese investment giant Softbank.
Ubereats pulled out of South Korea earlier this year, reflecting the intensity of competition.
Delivery Hero will acquire an 87 per cent stake in Woowa currently held by investors including Goldman Sachs and Singaporean fund GIC.
It will acquire the remaining 13 per cent of the company in the future, a Woowa spokesperson said, but without setting out a timeline.
“We are excited to enter into a strategic partnership with Woowa Brothers, which is at the forefront of innovative technological services and has put Korea on the map in the global online food delivery industry,” said Ostberg.