In an announcement on Monday, Delivery Hero SE (ETR: DHER) said it received approval from regulators to takeover Woowa Brothers – the owner of the top South Korean food delivery app. The approval, however, came with a condition that the German food-delivery service will offload Yogiyo – another South Korean food delivery app that it already owns.
Delivery Hero jumped more than 8% on market open on Monday. Including the price action, the German company’s shares are now exchanging hands at £115.80 versus a much lower £50.17 per share in March when the COVID-19 restrictions were at their peak. Delivery Hero had a per-share price of £64 at the start of 2020. The price action should come in handy if you are interested in investing in the stock market.
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Delivery Hero’s agreement with Woowa is valued at £2.97 billion
Delivery Hero’s agreement with Woowa Brothers is valued at £2.97 billion. The takeover will help it expand its footprint in South Korea that currently holds the third spot in the league of the world’s largest markets for online food delivery.
Online food delivery has been greatly in demand this year as the Coronavirus pandemic restricted people to their homes. The COVID-19 crisis has so far infected more than 81 million people worldwide and caused over 1.7 million deaths. Earlier this year in July, Delivery Hero had reported a 94% annualised growth in orders in the fiscal second quarter.
The European multinational originally struck a deal with Woowa in 2019 that helped it survive in a market that boasts intense competition. Upon regulatory approval, Delivery Hero now expects the deal to close next year in the first quarter.
CEO Niklas Ostberg’s comments on Monday
CEO Niklas Ostberg commented on the news on Monday and said:
“We are deeply saddened by the required condition to divest Delivery Hero’s subsidiary. We will work hard to ensure that this transition is as smooth as possible for all impacted employees.”
The Korea Fair Trade Commission (KFTC) has given six months to Delivery Hero to sell its entire stake in Yogiyo. There is, however, a possibility of extension on the deadline. The German food delivery service partnered with Mastercard last month to digitise payments and add convenience for its users.
Delivery Hero performed largely upbeat in the stock market last year with an annual gain of more than 100%. At the time of writing, the Berlin-based company is now valued at £18.73 billion.
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