SEOUL (Reuters) - South Korea’s GS Retail Co Ltd said on Friday it had partnered with two private-equity firms to buy Delivery Hero’s food delivery app, Yogiyo, in a deal valued at 800 billion won ($685 million).
The deal is expected to further intensify competition in the world’s third-largest online food delivery market, which is growing at a record pace since the COVID-19 pandemic started spreading in the country.
Yogiyo is the second-largest food delivery app in South Korea, with a 25% market share, and its sale was part of the condition to win regulatory approval for Delivery Hero’s $4 billion acquisition of Woowa, which owns industry leader Baedal Minjok.
The consortium, which includes PE firms Affinity Equity Partners and Permira, will buy existing shares in Delivery Hero Korea, the operator of Yogiyo, and infuse an additional 200 billion won, GS Retail said in a statement.
GS Retail’s investment will be a total of 300 billion won and includes a 30% stake, it said in a statement.
The company plans to combine Yogiyo’s strength in delivery with its 16,000 retail stores and 60 logistics centres to deliver a range of products.
Still, it has formidable competitors in Woowa’s app and Coupang Eats, the food delivery arm of e-commerce leader Coupang that has rapidly grown since its launch in 2019 to take the No.3 spot.
Mobile food delivery orders nearly doubled to 1.92 trillion won in June from a year earlier, the fastest growth rate among all e-commerce segments, according to data from Statistics Korea.
($1 = 1,167.8400 won)
Reporting by Joyce Lee; Additional reporting by Heekyong Yang; editing by Jason Neely and Anil D’Silva
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