BERLIN (dpa-AFX) – The food delivery service Delivery Hero now wants to keep its business in Southeast Asia. The company announced on Wednesday evening that talks with a potential buyer had been broken off. “The decision to break off the negotiations after months was made after careful consideration,” said CEO Niklas Östberg, according to the statement. Investors were disappointed. At the start, the share price fell by a good nine percent on Thursday morning. A recovery in the share price is becoming a long way off. Recently, speculation about a failure of the Foodpanda sale had already weighed on the company.
A week ago, CFO Emmanuel Thomassin told the financial news agency dpa-AFX that he saw no time pressure in selling the business. “We don’t have to sell Foodpanda, even if that would be an advantage for our liquidity.” The manager was also responding to investors’ concerns that Delivery Hero’s cash flow might not be sufficient to service its debts on its own.
Who exactly was supposed to be keeping an eye on Foodpanda remained unclear until the end. The obvious choice is the top dog Grab, which offers a variety of services in the region: Customers can have restaurant food and supermarket orders delivered to their home, book parcel deliveries and also order taxi-like rides via an app. Even when initial rumors arose about a move away from Grab in favor of a merger with competitor GoTo, Delivery Hero remained confident. The group operates Foodpanda in Singapore, Malaysia, Thailand, Cambodia, Myanmar, Laos and the Philippines.
The company couldn’t really get off the ground in the region anyway. Delivery Hero and its Baemin brand said goodbye to Vietnam at the beginning of December. In terms of sales, Asia is by far Delivery Hero’s most important segment. However, growth lags significantly behind that of the other regions: While all other divisions achieved double-digit percentage growth in the fourth quarter, sales development in Asia stagnated.
One reason for the slow growth in the Far East is the tough competition, which forced Delivery Hero to spend a lot of money on advertising. In the industry, companies usually attract new customers with discounts. However, advertising has often proven to be counterproductive in the past: especially in South Korea, Delivery Hero struggled with particularly resourceful customers who kept registering and were thus able to order food particularly cheaply. This is no longer possible now.
However, Delivery Hero doesn’t want to completely bury its sales intentions. The company remains open to discussions. “However, Delivery Hero will only continue negotiations that have a high probability of creating value for our shareholders,” it said. The board also wants to examine “strategic alternatives”./ngu/mne/jha/
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