In a strategic move to revamp its operations and boost profitability, Delivery Hero, the Berlin-based parent company of foodpanda, has made a significant announcement.
It has officially revealed its intention to sell a portion of its business operations in Asia. Among the potential buyers for this Southeast Asia-operating food delivery app, Singapore-based Grab has emerged as a prominent contender.
Should this deal come to fruition, Grab may be poised to invest over S$1.46 billion in acquiring foodpanda. This sale is expected to rejuvenate Delivery Hero’s financial standing, which had faced challenges in the aftermath of the Covid-19 pandemic.
The Potential Sale of Foodpanda’s Southeast Asia Operations
Delivery Hero’s decision to streamline its operations in Asia is in line with its plans to enhance profitability. According to reports from German business magazine WirtschaftsWoche, the company is actively exploring opportunities to sell its subsidiary brand, foodpanda, in several countries across Southeast Asia. The countries included in this potential sale are:
- Singapore
- Cambodia
- Malaysia
- Myanmar
- Philippines
- Thailand
- Laos
It’s important to note that this sale is unlikely to affect foodpanda’s operations in Bangladesh, Hong Kong, Pakistan, and Taiwan, as these will remain under the ownership of Delivery Hero for now..
Initially, Delivery Hero’s spokesperson dismissed the “market rumors” surrounding the potential sale. However, the company later confirmed that preliminary negotiations for the sale of foodpanda in the mentioned countries are indeed underway.
Grab’s Interest in Acquiring Foodpanda
Reports suggest that Grab, a Singapore-headquartered competitor, is actively considering the acquisition of foodpanda’s Southeast Asian business.
An insider source cited by the business magazine revealed that Grab has already initiated a comprehensive review of foodpanda’s operations in the region.
If the sale materializes, Grab may be willing to invest a substantial sum, with estimates reaching upwards of S$1.4 billion for acquiring foodpanda’s assets in each of the countries.
As of the time of writing, Grab has not made any official statements regarding these developments, maintaining a veil of secrecy around their intentions.
Aiming for Profitability Amidst Challenges
Delivery Hero’s strategic move to divest its Southeast Asia operations is primarily motivated by the pursuit of increased profitability. According to Bloomberg, Delivery Hero’s growth had hit a standstill following the easing of Covid-19 lockdowns. This decision could potentially help the company turn the tide, as it had recorded losses in each financial year prior to this.
The insider source emphasized that “Asian markets are liquidity burners,” hinting at the financial challenges Delivery Hero was facing in the region.