By Joyce Lee
SEOUL (Reuters) – South Korea’s antitrust regulator stated on Monday Supply Hero should promote its Yogiyo subsidiary to win approval for a $4 billion takeover of Woowa Brothers that will have given it a close to monopoly within the nation’s meals supply market.
The ruling from the Korea Truthful Commerce Fee (KFTC) is a setback for consolidation on the planet’s third-largest on-line meals supply market, though it was not instantly clear if it’s going to scupper the deal because the market dominance of Woowa’s No. 1 app is important even with out the subsidiary.
Berlin-based Supply Hero agreed final 12 months to purchase Korea’s prime meals supply app proprietor Woowa because it expands in Asia’s fast-growing however crowded market. For Woowa, the buyout is a lifeline in an intensely aggressive market.
However the KFTC stated it could solely approve the takeover if Supply Hero offered its complete stake within the nation’s No. 2 meals supply app Yogiyo in six months, with attainable extensions.
The unit sale would ease issues that diners would find yourself paying extra beneath the present deal, whereas permitting the synergy that Supply Hero cited as the rationale for the acquisition, KFTC chairperson Joh Sung-wook advised a briefing.
“Since Supply Hero stated the aim of this deal is to mix its logistics expertise and Woowa’s advertising and marketing capability, and I believe that is sufficiently attainable … I count on they will settle for this conditional approval,” she stated.
KFTC stated the mixed market share of the entity ensuing from the takeover, if the unit was not offered, could be 97% of meals supply transactions as of July.
Even when Supply Hero offered Yogiyo, Woowa’s No.1 app had about 15.8 million month-to-month energetic customers as of November, or 82% of all meals supply apps’ month-to-month energetic customers in South Korea, based on cellular huge information platform IGAWorks.
A Seoul-based spokeswoman for Supply Hero declined quick remark.
Critics say the regulator is ignoring the meals supply market’s quickly altering circumstances and multinational competitors, together with the expansion of Coupang Eats, a rival service by SoftBank-backed e-commerce agency Coupang.
Since launching in April 2019, Coupang Eats has unfold within the Seoul area to rank third in month-to-month energetic customers as of November after Woowa’s app and Yogiyo, based on IGAWorks.
The regulator stated there was inadequate proof Coupang Eats was a nationwide risk to Supply Hero-Woowa.
South Korea’s meals supply market ranks third after China’s and the US’, Euromonitor information confirmed, and is predicted to develop 40% this 12 months to about $15.4 billion.
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