Foodpanda deal would cement Grab’s market dominance – if regulators allow it

Delivery Hero, the Frankfurt-listed company that owns Foodpanda, has confirmed that it is in discussions for the potential sale of the latter’s business in “selected markets” in Southeast Asia.

In the region, Foodpanda operates in Singapore, Malaysia, Thailand, Cambodia, Myanmar, Laos, and the Philippines.

Few other details were shared, though Delivery Hero said negotiations are still in their “preliminary stages” and may not lead to a sale.

Singapore-headquartered Grab has been floated as a potential buyer, according to Wirtschaftswoche, which first reported the news. The German business magazine said the deal could cost over a billion euros (US$1.1 billion).

Investors have reacted warmly to the report, sending Delivery Hero’s shares up by 7% for the day. Grab’s shares were relatively unchanged, down 1%.

Photo credit: Shutterstock

Tech in Asia has reached out to Grab for comment about the matter.

In December 2022, Thai food delivery unicorn Line Man Wongnai was reportedly in talks to acquire Foodpanda’s Thailand business.

However, nothing came of those rumored discussions, and it’s possible that the current negotiations will have the same outcome.

But if a deal with Grab were to take place, it would be the company’s most transformative acquisition since it bought Uber’s Southeast Asian business in 2018, further entrenching its position as a market leader and putting its rivals across the region on the back foot.

Potential aside, though, the big question is whether competition authorities would approve such a Grab-Foodpanda deal.

SEA business not core

At first glance, it may seem strange that Delivery Hero wants to sell Foodpanda. After all, its Asia business accounts for 63% of its total gross merchandise value (GMV) and is profitable. In 2022, Delivery Hero reported an adjusted EBITDA of around US$61 million.

Delivery Hero’s Asia business actually comprises both Foodpanda and Woowa, which operates in South Korea and Vietnam under the brand Baemin.

Venture builder Momentum Works estimated that South Korea alone contributed more than 70% of DeliveryHero’s Asia GMV in 2021.

Seal the deal

Competition is key