Shinsegae drops bid to acquire Yogiyo
Yogiyo delivery scooters are parked in front of its office in Seoul in this June 2020 file photo. Yonhap
Bidding for food delivery service turns into battle among PEFs
By Park Jae-hyuk
Shinsegae's e-commerce arm, SSG.com, has dropped out of the final bid to acquire Yogiyo from Delivery Hero, turning the race to buy the nation's second-largest food delivery app into a competition between private equity firms (PEFs).
“We thoroughly reviewed the possibility of creating synergy through integrating retail and delivery platforms. However, we decided not to participate in the final bid,” an SSG.com spokesman said Wednesday. “We will continue to review various platforms with growth potential,” he added.
MBK Partners, Affinity Equity Partners and Permira participated in the final bid, before the German company postponed the deadline for the final bid for a second time last Thursday, according to industry sources.
Along with SSG.com and another PEF, Bain Capital, the three bidders had been on a shortlist for the acquisition, which was drawn up after preliminary bidding June 10. Lotte did not take part in the preliminary bid, maintaining its stance that it is not interested in the cash-intensive deal.
Market insiders have considered the deadline for the final bid to have been less meaningful, because Delivery Hero and the underwriter for the deal, Morgan Stanley, have essentially failed to sell the food delivery app operator through a public tender.
“Morgan Stanley is meeting each potential buyer separately,” a source familiar with the issue said. “Delivery Hero will try to postpone the Aug. 2 deadline for the sale, which was a date designated by the Fair Trade Commission (FTC), because it is impossible to finalize the deal within a month. It generally takes several weeks to negotiate clauses in a share purchase agreement.”
When Delivery Hero decided last year to take over Baedal Minjok, the nation's largest food delivery service operated by Woowa Brothers, the antitrust watchdog ordered the German firm to sell its Korean operation, Yogiyo, by Aug. 2.
The FTC, however, allowed the company to delay the deadline until February 2022, if circumstances beyond Delivery Hero's control occured.
Weber Shandwick, Delivery Hero's local PR agency, has declined to disclose the specific schedule for the final bid. It also said Delivery Hero has not excluded any bidders in the sale of Yogiyo, emphasizing that its client is carrying out the divestment process in compliance with the instructions received by the FTC.
Such a stance has been viewed among market insiders here as an attempt to attract additional bidders by the antitrust regulator's delayed deadline.
Baedal Minjok delivery scooters are parked in Seoul in this file photo. Courtesy of Woowa Brothers
As the Yogiyo deal is losing luster, the bidders are expected to ask Delivery Hero and Morgan Stanley to lower the acquisition price. While the seller wants 2 trillion won ($1.8 billion), the potential buyers are said to have offered less than 1 trillion won.
Among the three PEFs that participated in the final bid, MBK is seen as the strongest candidate to take over Yogiyo, because it has enough cash partly due to restructuring companies it owns, and could possibly reinforce the e-commerce business of Homeplus it already owns.
Since MBK dropped out of a bid for eBay Korea, the PEF has focused on the Yogiyo deal.
In contrast, eBay Korea's new owner, Shinsegae, was not expected to participate in the bid for Yogiyo given its acquisition of an 80 percent stake in the e-commerce firm from its U.S. headquarters.
S&P Global Ratings said Shinsegae's E-mart will face a financial burden for its eBay Korea acquisition, and put the discount store chain's credit rating on the negative watch list.