Grab’s acquisition of Foodpanda Taiwan represents a long-awaited opportunity to expand beyond Southeast Asia at a relatively reasonable price, Momentum Works said in a statement on Tuesday.
The firm said in a statement that the acquisition price is significantly lower than what Uber had previously agreed to pay for Foodpanda Taiwan business.
Back in 2024, Delivery Hero had reached an agreement with Uber to sell the Taiwan business for $950 million.
As part of that deal, Uber would also invest $300 million in Delivery Hero’s holding company.
“However, at the time, none of our industry contacts in Taiwan believed the deal would receive regulatory approval. Then, as expected, the Fair Trade Commission blocked the transaction on Christmas Day in 2024,” said Momentum Works.
It noted that Taiwan’s economy is more than half the size of Indonesia’s with 8 times gross domestic product (GDP) per capita.
“With an annual food delivery market of around $3.6 billion, gross profit of more than $0.6 per order, strong supply, dense urban consumer demand and strong purchasing power, there is meaningful upside beyond just delivery profitability,
“It is also a proven profitability model which Grab is acquiring. Shopee being Taiwan’s largest food delivery platform proves the operational synergies a Singapore-based tech platform can build in Taiwan,” it added.
For now, it sees Grab and Uber are unlikely to engage in aggressive competition in Taiwan as after all, Uber remains Grab’s largest shareholder.
“The two players can effectively keep potential challengers at bay, while building up the operations and profitability in the market. The only potential challenge to that would be geopolitical,” it noted.
Momentum Works also highlighted that Taiwan is arguably the best asset in Delivery Hero’s Foodpanda portfolio.
It is noted Foodpanda in Taiwan holds a slight market share lead over Uber Eats (our estimate is between 55 percent/45 percent and 52 percent/48 perncet), and is profitable.
“We estimated that in 2024, revenue per order was around 36 percent to 38 percent of gross merchandise value (GMV), with gross margins of 6 percent to 7 percent,” said Momentum Works.
Momentum Works has also long argued that Delivery Hero should divest its Foodpanda operations in Southeast and South Asia and focus on Taiwan.
“However, the issue has probably not been willingness to sell – but the difficulty of achieving a good price. Previous discussions with Grab on selling the Southeast Asia business did not materialize，” it said.
According to Momentum Works, what Delivery Hero lacks most right now is cash.
The company has historically relied on convertible bonds to fund acquisitions and expansion.
“But with its share price down nearly 90 percent over the past five years, and its core profit-generating markets – Korea, Saudi Arabia, and the United Arab Emirates (UAE) – facing both competitive and macro challenges, its room for maneuver is increasingly limited,” said Momentum Works.
Earlier this month, Aspex Management, a Hong Kong-based institutional investor holding more than 9 percent of DeliveryHero share, publicly urged Chief Executive Officer Niklas Östberg to either deliver a turnaround or step down.
Beyond Taiwan, Korean media also recently reported that Delivery Hero has been exploring a potential sale of its Korean platform Baemin since late last year.
Grab and Meituan were both mentioned as potential buyers, although the reported asking price of $4.9–5.6 billion would be significantly higher than the $600 million paid for Taiwan.