[Edaily Marketin Hur Jieun Reporter] Global mobility giant Uber has officially announced its acquisition of Delivery Hero (DH), the German parent company of Baedal Minjok, South Korea’s leading food delivery app. This marks Uber’s return to the South Korean market after more than seven years, following its withdrawal from the market in 2019 with the shutdown of Uber Eats.

Initially, the market had cited Uber as a leading candidate to acquire Baemin outright, but Uber’s choice was far bolder and more astute. Rather than paying a high price for individual assets whose valuations had skyrocketed, the company opted for a strategy of acquiring the parent company in its entirety to secure its most valuable assets all at once.

Rather than acquiring

individual assets separately… Uber turns the tables

According to investment banking (IB) industry sources on the 18th, Uber announced on the 16th (local time) that it had signed a merger agreement with Delivery Hero and would launch a tender offer at 41.5 euros per share. Taking into account Uber’s existing stake, the total acquisition value amounts to $13.7 billion (approximately 20.3 trillion won). Delivery Hero’s enterprise value, based on 100% ownership, was valued at $14.8 billion (approximately 21.9 trillion won). With this acquisition, Baemin—in which Delivery Hero holds a stake—is also expected to become a subsidiary of Uber.

Delivery Hero had previously been pursuing a standalone sale of Baemin. The estimated sale price for Baemin, as discussed in the market, was around 8 trillion won. However, with the cutthroat competition with Coupang Eats reaching a fever pitch, there were persistent concerns about the “winner’s curse” associated with betting trillions of won on Baemin alone. In fact, after Delivery Hero selected JPMorgan as the lead underwriter, numerous strategic investors (SIs) conducted due diligence, but it was reported that there were significant disagreements regarding the valuation.

Initially, Uber was also mentioned as a leading potential buyer for Baemin, having formed a consortium with Naver. There were also indications that it would participate in the final bidding scheduled for the 21st. However, the market sentiment shifted after it emerged that Uber had been steadily acquiring shares in Delivery Hero instead of Baemin since last May. Uber secured a 36.83% stake in Delivery Hero, becoming the largest shareholder, and is now proceeding with this tender offer.

Delivery Hero’s

Deteriorating Financial Structure… The Backstory of the

“Package Deal”
Having set its course through the acquisition of the parent company, Uber has changed the game entirely. With approximately 22 trillion won in funds earmarked for the acquisition of Delivery Hero, Uber aims to acquire not only Baemin, South Korea’s No. 1 food delivery platform, but also △Talabat, the No. 1 platform in the Middle East; △PedidosYa(PedidosYa), △HungerStation in Saudi Arabia, and △Foodpanda in Asia—platforms that dominate 50 global markets—as part of a single package.

This bulk sale is also good news for Delivery Hero shareholders, who were in urgent need of an exit (return on investment). Delivery Hero faced a liquidity crisis due to aggressive expansion and the maturity of convertible bonds (CBs) issued during the low-interest-rate era. Amid a prolonged stock price plunge, pressure on the largest shareholder, Prosus, to exit had intensified under attacks from Aspex, the second-largest shareholder and an activist fund.

The prevailing view in the market is that Uber has emerged victorious in terms of valuation. It is being hailed as a clever strategy that completely seized the initiative in negotiations by avoiding the valuation friction that would have arisen from selling off individual assets, while addressing the pressing needs of DH shareholders who were struggling with liquidity pressures. Uber aims to close the deal in the second half of next year, following regulatory reviews of the merger and other procedures.

Will Uber Eats Shake Up KakaoT Following Baemin and Coupang Eats

?
With the acquisition of Delivery Hero, Uber is expected to re-enter the South Korean market. This comes more than seven years after Uber exited the market following the shutdown of its Uber Eats business in 2019. Uber emphasized that “South Korea is one of Uber’s core markets” and stated its plan to continue investing in Baemin’s technological capabilities and provide the necessary support to ensure continuity of service and user experience for Korean customers.

It remains to be seen whether Baemin, now backed by Uber, will widen the gap with Coupang Eats. According to WiseApp·Retail, the domestic market currently operates as a duopoly, with Baemin and Coupang Eats accounting for 88.3% of the total market. Although Coupang Eats is rapidly increasing its market share by promoting free delivery membership benefits, the industry predicts that Baemin will widen the market share gap through aggressive marketing in the future.

This merger is also expected to introduce new variables into the domestic taxi-hailing market. Currently, Kakao Mobility (Kakao T) dominates over 90% of the domestic taxi-hailing market, effectively holding a monopoly. Uber’s Uber Taxi (UT) holds only a single-digit market share. Analysts suggest that if Uber’s subscription model, “Uber One,” were to merge with Baemin, it could impact both the food delivery and taxi-hailing markets.

An industry insider explained, “From Uber’s perspective, acquiring the overseas parent company to secure control would have been a wiser choice—in terms of both regulation and price—than buying Baemin separately at a high cost,” adding, “It will take a considerable amount of time to pass merger reviews by regulatory authorities in various countries, including South Korea’s Fair Trade Commission.”