[팍스넷뉴스 정강훈 기자] Delivery Hero (DH) chose “Delivery People” instead of “Yogiyo”. DH must sell Yogiyo within the next six months as determined by the Fair Trade Commission. As Yogiyo, the second-largest delivery app, appears in the M&A market, interest in candidates for acquisition is drawing.
As the delivery app market is growing rapidly, it is evaluated that the service itself is attractive. In addition, it is a good news that the delivery service has grown qualitatively and quantitatively with Corona 19. However, the fact that profitability is low compared to corporate value and that the market share gap with the No. 1 company is not narrowing is considered a factor that makes the acquisition reluctant.
◆Bleeding competition with only scars… Sale of the predicted Yogiyo
Many industry officials see DH as a’predicted procedure’ that DH chose the people of delivery instead of Yogiyo. This is because Yogiyo was not able to find a breakthrough in the domestic market, so it is believed that the acquisition of Bae Yi-eui people (corporation name, Graceful Brothers) was made.
In particular, last year, delivery app makers fought a massive bleeding competition. It was because Coupangitz emerged as a new challenger while the people of Delivery and Yogiyo were fighting for share. Each company has begun to actively use coupons to attract consumers for marketing.
As a result, companies suffered huge operating losses last year. The No. 1 company, Elegant Brothers, turned to the red with sales of 5654 billion won, an operating loss of 36.4 billion won and a net loss of 75.6 billion won last year. Delivery Hero Korea, which operates Yogiyo and delivery boxes, posted sales of 94.81 million euros (about 126.7 billion won) and a net loss of 43.91 million euros (about 58.6 billion won).
As Yogiyo, he invested a huge amount of money, but did not achieve the expected effect. This is because the gap between the nation and the share of delivery did not decrease at all. Even if Yogiyo spends massive marketing expenses, the bleeding competition was meaningless because it was a condition in which the people of delivery could immediately set up a ‘match’. Against this background, DH made an all-out proposal to take over the elegant brothers.
For DH, it is not easy to sell Yogiyo. However, DH, who is betting his life and death in the Korean market, was in desperate need of acquiring elegant brothers even at the expense of trillions of won. As the market share gap between the first and second largest companies is widening, it would not be a bad decision if DH recovers a satisfactory amount through the sale of Yogiyo.
In addition, even if we look at the room for growth in future profitability, it is evaluated that the people of delivery are better. This is because, although the tariff system is different between the people of Delivery and Yogiyo, the people of delivery, on average, charge lower fees to merchants. However, at the beginning of the year, the people of delivery attempted to reorganize the rate system and withdrew their decision due to negative public opinion, so it seems difficult to reorganize the rate system for the time being.
◆ Alley market infringement public opinion burden… “The original seller pool is narrow”
Yogiyo is expected to cost at least 1 trillion won. However, there are many negatives. First of all, the ransom is so high that there are very limited candidates who can afford to take over. In addition, there are a number of negative factors in the sale.
Representative candidates for Yogiyo are Naver, Kakao, and Coupang. Naver is the largest company in the delivery-related market. It is a major shareholder of Mesh Korea, an operator of the delivery agency service’Vureung,’ and at the same time recently invested in Insung Data, an operator of another delivery agency service,’Saenggak-daero’.
In addition, Yogiyowa is already collaborating on delivery brokerage services. However, it is known that Naver, as a major shareholder of the elegant brothers, has a one-year ban on competition in the stake sale contract. For DH, there is a problem that Naver has the potential to grow into a strong competitor.
There are many evaluations that Kakao is difficult to acquire with its own funds. It is pointed out that Coupang is unlikely to take over as Coupang Itz, which is competing with its own logistics, is growing.
In addition, large distribution companies such as Lotte and Shinsegae, which are investing heavily in the e-commerce field, are emerging as candidates. However, it is said that it is not easy for a large distribution company to operate a delivery app service that is in contact with the alley commercial area. Although Naver and Kakao are showing interest in delivery brokerage services, the reason for not aggressively investing is the same.
If the original seller’s pool is narrow, private equity funds (PEF) will also be reluctant to take over. This is because exiting is difficult even if the company’s management situation is improved. It is not a business model favored by PEFs as it is not a market environment where stable cash generation can be expected from fierce competition.
Under these conditions, DH must be sold within 6 months, and up to 12 months when extended. At the negotiating table, it is also a problem that DH is an unfavorable condition for negotiations, but there is a prospect that it will not be easy to sell it because there are limited original buyers who can take over.
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