Delivery Hero seeks more time to sell Korea's Yogiyo

Delivery Hero SE has requested up to another six months to sell South Korea's No. 2 food delivery platform Yogiyo, the estimated value of which was slashed by three-quarters to 500 billion won ($440 million) due to a lack of interest from strategic buyers.

On July 12, the German food delivery giant submitted requests for a deadline extension to the Korea Fair Trade Commission (KFTC) on the disposal of its 100% stake in Yogiyo, according to the antitrust body.  

Originally it was required to sell the delivery app by Aug. 2, in compliance with the conditions put forward by the KTFC to close its 4.75-trillion-won purchase of Yogiyo's bigger rival: Baedal Minjok, or Baemin.

As early as this week, the commission will decide on whether to extend the deadline by as long as six months, or until next February.

If Delivery Hero fails to sell Yogiyo by an extended deadline, it could face about 500 million won per day in fines, equivalent to 0.0001% of its 4.75 trillion won ($4.2 billion) acquisition price of Baemin because it is believed to have a monopoly on the country's food delivery service market. 

When Delivery Hero put 100% of Yogiyo on the market last December, the sale was expected to bring in about 2 trillion won. Until last year, both Baemin and Yogiyo controlled over 80% of the domestic market, with Coupang Eats a distant third player. 

Following the COVID-19 outbreak, however, Coupang Eats has been expanding its market share at a rapid pace by introducing single order delivery, with riders picking up just one order per trip to reduce delivery time and keep the food warm and fresh. 

Industry watchers say it is just a matter of time before Coupang Eats overtakes Yogiyo once the unit of Coupang Corp. expands beyond the Seoul metropolitan area, backed by the deep-pocketed e-commerce platform.

Among the five shortlisted bidders of Yogiyo, Shinsegae Inc.'s e-commerce brand SSG.COM and Bain Capital had already pulled out. It was not known whether the three remaining bidders -- MBK Partners, Affinity Equity Partners and Permira -- remained in the race.

Given market concerns over Yogiyo's value as a stand-alone entity, once it is separated from the German delivery company, its price tag may fall far short of earlier market expectations, according to investment bankers.

Write to Chae-yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.