Baemin-Yogiyo M&A, Variables in Share and Asset Sales

On the 2nd, a delivery worker recruitment notice was posted at a local center of a delivery agency in downtown Seoul. Due to the resurgence of the novel coronavirus disease (COVID-19), the volume of delivery orders has surged, causing ongoing difficulties in securing delivery workers. According to Baedal Minjok, the total number of orders during the last week of August, from the 24th to the 30th, when COVID-19 spread was severe, increased by 26.5% compared to the last week of July (the 20th to the 26th). Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Moon Chaeseok] As the Fair Trade Commission's review results on the merger and acquisition (M&A) of Baedal Minjok and Yogiyo are expected to be announced next month, it has been reported that the FTC has expressed opinions that share disposal and asset sales may be necessary.

According to industry sources on the 12th, the FTC Secretariat (equivalent to the prosecution) is believed to have judged that a monopoly could be formed with a market share exceeding 90% in the delivery app market if the two companies merge, and that preemptive measures should be taken to prevent this.

The industry expects that the FTC may require Delivery Hero (DH), the operator of Yogiyo and Baedaltong, to sell either Yogiyo or Baedaltong as a prerequisite for DH's acquisition of Woowa Brothers, which operates Baemin.

According to Nielsen Korea Click, as of September (monthly active users), the market shares of delivery app companies are Baemin 59.7%, Yogiyo 30%, and Baedaltong 1.2%. The combined market share is 90.8%, making them a monopolistic operator. The market shares of latecomers Coupang Eats and Wemakeprice O are 6.8% and 2.3%, respectively.

If DH sells Yogiyo, the market share will decrease to the 60% range. Depending on who acquires Yogiyo, the second-largest operator's market share will be between 30% and 37%. The gap between the first and second place narrows to about 23 percentage points.

There is also talk of selling Baemin's subsidiary, 'Foodtech.' Foodtech manages POS (Point of Sale) devices, which are devices that receive orders inside restaurants and can call delivery agencies.

When the FTC Secretariat presents its opinion, the nine commissioners of the committee (equivalent to a court) listen to the opinions of the parties under review in a plenary session and reach a final agreement. The final measures may vary depending on the review results.

Although a plenary session is tentatively scheduled for the 9th of next month, it may be postponed if the submission of the parties' opinions is delayed. An FTC official said, "No decision has been made regarding the FTC's position on the review content or corrective measures for this M&A case, nor on the review schedule."

This content was produced with the assistance of AI translation services.