Baedal Minjok founder points finger at Delivery Hero as reason of M&A deal
Woowa Brothers CEO Kim Bong-jin said that he will take charge of around half of Delivery Hero markets by selling his company to the German online food-delivery service provider.
Kim made the remarks in a recent interview with the Chosun Ilbo. Late last year, Delivery Hero agreed to spend $4 billion to take over Woowa Brothers, which runs Korea’s biggest food delivery app named Baedal Minjok.
“It is wrong to say that I sold Baedal Minjok because a sell-off is supposed to lead to the change of management and restructuring. Our case is different,” Kim said.
“I will be in charge of the Asian markets (of Delivery Hero), while Delivery Hero will operate such areas as Europe, the Middle East, and South America. In terms of the size, it is an around 50/50 division.”
Kim said that a 13 percent stake of Woowa held by him and his aides will be converted into Delivery Hero shares in four years.
Asked why he decided to make the deal, Kim picked the going concerns as a primal reason. In other words, he pointed his finger at Delivery Hero, which prompted him to “fear that Woowa may collapse” by generating hyper-competition here.
“Our competitors are operated by a Korean subsidiary of Delivery Hero, which sold its takeout app to secure 1 trillion won in 2018 and poured the money in Korea,” said the 43-year-old who created Woowa in 2011.
“As a result, we failed to remain profitable last year. Because of the competition in Korea, we could not tap into global markets while our rivals already took a firm root there.”
Delivery Hero has proactively waded into the Korean market by launching Yogiyo in 2012 and snapping up Baedaltong in 2015. They are the country’s No. 2 and No. 3 players.
He made it clear that commissions for merchants would not go up even after the M&A in the Korean market.
However, Kim did not state about the worries that the nation’s iron-fisted Fair Trade Commission (FTC) may take issue with the M&A that will give almost full control of Korea’s food delivery market to Delivery Hero.