Green Asia

Commentary: Could Trans-cab merger and rumoured foodpanda buyout spell trouble for Grab customers?


In food delivery, the focus of leading players has definitely shifted towards profitability.

Although Delivery Hero announced in August that it had achieved positive adjusted profit before interest, tax, depreciation and amortisation (EBITDA) on a group level in the first half of 2023, it had hinted in earnings calls that it would exit markets where it did not have a clear lead.

There have been rumours of Delivery Hero exiting foodpanda in Southeast Asia since last year. Based on the Momentum Works Apples to Apples analysis, Delivery Hero Southeast Asia collectively contributes less than half of the gross merchandise value that Korea generates through its subsidiary Woowa Brothers. In addition, Delivery Hero has also been grappling with a diminishing market share in the region and a much weaker cash position compared to Grab.

In this context, it is hard to see how Delivery Hero could turn this around and make Southeast Asia meaningful and worthwhile for it. If the decision is indeed to exit Southeast Asia, the only choices are finding a buyer or shutting down.

Shutting down is not an ideal outcome for everyone involved – employees, F&B establishments, riders and customers. There was chaos when Deliveroo suddenly announced on Nov 16, 2022 it would exit Australia immediately, shocking restaurants and customers with unfulfilled orders and sent riders scrambling for jobs.

Things could only be more complicated in Southeast Asia’s fragmented markets. Delivery Hero itself would need to go through the painful process of liquidating its multitude of entities, which could take very long and be very costly.

While Grab has not acknowledged talks with Delivery Hero, it’s hard to see any other party with meaningful business logic and experience to take over foodpanda.

Unlike the Grab-Trans-cab deal – which is estimated to be around S$100 million (US$75 million) for 2,500 vehicles, vehicle workshops and fuel pump operations – the question is what Grab really gains from buying foodpanda for a rumoured €1 billion (US$1.06 billion) when it has its own established food delivery network and could simply wait to fill the space left by foodpanda’s exit.

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