The Move Is Seen to Strengthen Bargaining Power in Potential Baemin Acquisition
Uber is being mentioned as a strong candidate to acquire Baemin.
Uber has acquired an additional stake in Delivery Hero (DH), the parent company of Baedal Minjok (Baemin), to become its largest shareholder. As Uber is being mentioned as a strong candidate to acquire Baemin, this is analyzed as a strategic move to increase its bargaining power in the future. The industry also raises the prospect that Uber could utilize the investment in the parent company’s stake as an indirect option, considering the regulatory risks of domestic delivery platforms.
DH announced on May 18 (local time), “Uber has acquired additional shares and securities of DH, resulting in holding 19.5% of the issued shares and an option to acquire an additional 5.6% stake.”
With this stake acquisition, Uber has overtaken Prosus, the former largest shareholder, to become the largest shareholder of DH. Uber previously secured a 7% stake by purchasing shares worth 270 million euros (about 470 billion won) from Prosus last April. Through this transaction, it increased its stake to 19.5% and also held an option to acquire an additional 5.6% stake.
Uber left open the possibility of acquiring an additional stake within the range where its total holding does not exceed 30%. According to DH’s disclosure on May 18, Uber stated, “We may acquire additional voting rights or dispose of shares within the next 12 months,” adding, “At present, we have no intention of acquiring 30% or more of the issuer’s voting rights.” This is interpreted as drawing a line on the holding limit because, under German regulations, holding 30% or more of voting rights can trigger a mandatory tender offer obligation to other shareholders.
Amid Uber being mentioned as a strong candidate to acquire Woowa Brothers, the operator of Baemin, analysis suggests that it is reviewing various acquisition methods. In South Korea, it is known that Uber has formed a consortium with Naver and submitted a letter of intent to acquire a stake in Baemin. Naver stated in an explanatory disclosure on December 19, “We are reviewing various measures to strengthen our business competitiveness, but nothing has been specifically decided at present,” though it is not denying the matter.
If Uber and Naver form a consortium to pursue the acquisition of Baemin, they must go through a business combination report and review by the Fair Trade Commission and a foreign investment report. In particular, the interpretation is that if the structure involves the participation of Naver, which has significant influence in the domestic search, map, and commerce markets, the Fair Trade Commission could broadly look into the anti-competitive effect in the relevant markets.
Professor Joo Jin-yeol of Pusan National University School of Law said, “Because neither Uber nor Naver directly operates a delivery business in South Korea, it can be viewed as a conglomerate business combination, and it is generally difficult for a conglomerate business combination to be evaluated as having a large anti-competitive effect,” but added, “If the government determines that there is an anti-competitive effect, there is a risk that the acquisition could fall through.”
Securing a stake in DH allows for securing indirect influence through the parent company’s stake, separate from directly acquiring Baemin’s stake or management rights. In this case, interpretations emerge that it can secure influence over Baemin while reducing the regulatory burden associated with the direct acquisition of a domestic delivery platform.
An industry official stated, “South Korea has regulatory risks regarding the delivery industry and foreign-invested companies, so Uber could also be affected,” adding, “Uber may choose to exert influence as an investor in Baemin rather than directly operating a delivery service in South Korea.”
Jung Suk-yee
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