Delivery Hero's Stumble in Taiwan's Foodpanda Game
A Fresh Take on the TFTC's Veto
By Helmut Kipp, in a laid-back and conversational style
Struggling Delivery Hero Requires Resumption of Operations.
Alright, let's talk Delivery Hero and its misfortune in the Taiwanese Monopoly game for Foodpanda. The competition authority TFTC has thrown a spanner in the works, blocking the planned sale to Uber. While Uber can still appeal the verdict, the odds of success seem slim. Why? Well, it's simple: Taiwan's food delivery market is dominated by just two main players, and a merger means less competition. So, a transaction is highly unlikely to succeed unless one of the providers is on the brink of extinction, which isn't the case for either Uber or Delivery Hero.
Costly Counsel Ahead
Now, this calls for some pricey advice. Other international players might not find it enticing to nab Delivery Hero's spot in Taiwan's duopoly. Even if a substitute buyer pops up, the potential synergies and cost savings would be significantly lower. In turn, they wouldn't be keen on offering the price Uber was willing to pay. From Delivery Hero's point of view, the transaction terms were pretty sweet, as their stock price skyrocketed by a quarter upon announcement, despite the well-known antitrust hurdles.
Troubles on the Horizon
Adding to the misery, Delivery Hero is now facing a shortfall of around 1.2 billion euros. With their financial health already strained, this is a bitter pill to swallow. On the bright side, Delivery Hero finds solace in the successful IPO of its subsidiary Talabat in Dubai, which brought in nearly 2 billion euros. This injection of cash gives the indebted company some financial reprieve and squashes doubts about its financial stability. Still, there's no rest for the wicked, with challenges like the full-time employment for Glovo's delivery couriers in Spain and the EU's ongoing antitrust dispute looming large.
Potential Acquirers for Delivery Hero: A Closer Look
While Delivery Hero explores its options, several companies might potentially be interested in the Taiwanese market, which is substantial due to its size and limited presence of some global players like Meituan. Here's a lowdown of potential suitors:
- Coupang Eats: With its expanding food delivery services and growing popularity in Korea, Coupang could be a strong contender for Taiwan's scene, especially considering Meituan's reluctance to enter for political reasons.
- Didi: Known for its ride-hailing services, Didi has been readjusting its food delivery business and might see Taiwan as a strategic market to edge out competitors.
- Local Taiwanese Companies: Strongly rooted local players could also make a play for Delivery Hero's Taiwanese asset, with e-commerce platforms or logistics companies being prime examples.
- Other Global Players: Companies like DoorDash or Uber, if they decide to venture into Asia, might find Taiwan an attractive market.
Challenges Awaiting Prospective Buyers
Prospective buyers in Taiwan's food delivery market would face several obstacles:
- Market Competition: Establishing a foothold in Taiwan's competitive market would necessitate a considerable investment in marketing and customer acquisition.
- Regulatory Barriers: History shows that regulatory hurdles can be daunting, as demonstrated by the rejection of the Uber deal by Taiwan's Fair Trade Commission.
- Logistical Challenges: Setting up an efficient logistics system for food delivery calls for substantial investment and careful infrastructure planning, particularly in densely populated areas like Taipei.
- Consumer Loyalty: Building brand loyalty in a market where existing platforms have strong brand recognition can prove challenging and demands innovative strategies to win over customers.
- Global Competition: Players like Meituan and Didi could still make an indirect entry or influence the market through partnerships or other business ventures, potentially altering the market dynamics and competition landscape. So stay tuned as this saga unfolds!
- Despite Delivery Hero's misfortune in Taiwan's Foodpanda game, other international players might find it unappealing to take their place in the duopoly, given the low potential synergies and cost savings.
- Uber, as a potential buyer for Delivery Hero's spot, might find the odds of success slim due to Taiwan's food delivery market being dominated by just two main players: Uber and Foodpanda.
- If Delivery Hero chooses to seek another buyer, technology giants like Coupang, Didi, DoorDash, or Uber could find Taiwan an attractive market, given its size and limited presence of global players like Meituan.
- Prospective buyers in Taiwan's food delivery market would face various challenges, including market competition, regulatory barriers, logistical challenges, consumer loyalty, and potential competition from global players like Meituan and Didi.
