Meituan, the prominent Chinese delivery company, is reportedly considering the possibility of acquiring the Foodpanda delivery business in Southeast Asia. This move is part of Meituan’s strategy to expand its operations beyond the domestic market, as disclosed by individuals familiar with the situation.
Discussions regarding a potential acquisition have taken place between Meituan and Delivery Hero, the Germany-based parent company of the Foodpanda brand. The individuals providing this information requested to remain anonymous as the details are confidential.
The outcome of the discussions remains uncertain, and there is no guarantee that they will result in a transaction. Other potential bidders may also come forward. Despite requests for comment, a representative from Meituan did not respond, and a spokesperson for Delivery Hero declined to provide any comments.
Established in 2010, Meituan has grown to become the largest food delivery platform in China. With a presence in over 2,800 cities and counties within the world’s second-largest economy, the tech giant launched KeeTa, a new food delivery brand, in Hong Kong in May.
Meituan’s entry into Southeast Asia would pose a competitive challenge for Grab Holdings Ltd, the super-app dominating the region with its services in ride-sharing, food delivery, and fintech.
The Singaporean company, which has recently achieved profitability on an adjusted basis after a decade of operation, would face a significantly more formidable competitor in Meituan compared to its existing regional counterparts.
Grab has been suggested as a potential contender for the acquisition of the regional Foodpanda operations.
Foodpanda holds a substantial presence in Southeast Asia, contributing to approximately 20% of the region’s gross merchandise value in 2022. According to Bloomberg analysts, Grab is viewed as a more suitable candidate for acquiring Foodpanda compared to regional counterparts Sea and GoTo. The latter faces challenges related to competition and cash flow risks. Analyst Nathan Naidu suggests that a potential deal could elevate Grab’s market share from the current 40-50% to above 70%.
In the quarter ended in June, Meituan announced its swiftest revenue growth since 2021, driven by the resurgence of dining and travel following the depths of the Covid-19 crisis, despite a broader slump in consumer spending.
The company is broadening its scope, venturing beyond grocery retailing into group-buying. In March, it opted to discontinue its self-operating model for ride-hailing services as a cost-cutting measure. Additionally, it is making substantial investments in live-streaming services to compete with rivals such as Douyin, the local counterpart of TikTok.
In September, Delivery Hero announced ongoing discussions regarding the potential sale of a portion of its operations in Southeast Asia, where growth has plateaued since the easing of Covid lockdowns. The proposed deal would include the divestment of the Foodpanda brand in Singapore, Malaysia, the Philippines, Thailand, Cambodia, Myanmar, and Laos.
