Meituan Reportedly Weighed Buying Foodpanda’s Southeast Asia Business

This is an English adaptation of a FoodBud historical article originally published on November 17, 2023.

On November 17, Bloomberg, citing people familiar with the matter, reported that Meituan had held talks with Delivery Hero about acquiring Foodpanda’s Southeast Asia operations. The potential move would help Meituan diversify beyond its domestic market.

It was not clear whether the talks would lead to a transaction, and other bidders could still emerge. Meituan did not respond to a request for comment, while a Delivery Hero spokesperson declined to comment.

Why the Deal Would Matter

Meituan was founded in 2010 and has become China’s largest food delivery platform. In May 2023, it launched a new delivery brand in Hong Kong, Keeta.

For overseas expansion, acquisition is the fastest route: buying market access saves time. Building a new delivery brand from scratch is much slower.

Delivery Hero’s Southeast Asia Exit Talks

In September 2023, Delivery Hero said it was in talks to sell part of its Southeast Asia business, where growth had stagnated since the easing of COVID-era restrictions.

The company was discussing a divestment of the Foodpanda brand in Singapore, Malaysia, the Philippines, Thailand, Cambodia, Myanmar, and Laos.

WirtschaftsWoche first reported the potential sale, saying Grab might be interested and could pay slightly more than EUR 1 billion. Analysts noted that antitrust approval would likely be the biggest obstacle to a Grab acquisition.

Grab’s Position

Grab’s third-quarter results showed adjusted EBITDA turned positive for the first time on a quarterly basis, with a profit of USD 29 million.

Grab had also repositioned its delivery business more toward dining. In addition to delivery and pickup, it added presale “meal vouchers” for in-restaurant use, a shift that the article describes as becoming more Meituan-like.

Meituan’s Financial Context

Bloomberg said Meituan’s Southeast Asia expansion would create a challenge for Grab.

According to Meituan’s first-half 2023 results, revenue reached RMB 126.6 billion, up 30% from RMB 97.2 billion in the same period of the previous year.

On operations, Meituan moved from a RMB 6.1 billion operating loss in the prior-year period to an RMB 8.3 billion operating profit. Core local commerce operating profit rose 59%, from RMB 13.0 billion to RMB 20.5 billion, while operating losses from new initiatives narrowed 33%, from RMB 15.2 billion to RMB 10.2 billion.

Note: transaction discussions and deal-value figures above are historical as of November 17, 2023.