Europe-based online food-delivery service provider, Delivery Hero SE, has reportedly declared that the company has sought regulatory approval for its joint venture with leading food delivery operator in South Korea, namely, Woowa Brothers Corp, from the Korea Fair Trade Commission.
For the uninitiated, the approval is mainly subject to the divestiture of Delivery Hero Korea LLC, a 100% South-Korean subsidiary of the online food-delivery firm as well as the maintenance of Yogiyo’s status quo until the completion of the divestiture. However, the main objective of the company is to close the transaction in March 2021.
Previously on December 13, 2019, Delivery Hero had revealed the purchase of shares towards the establishment of the joint venture with the management of Woowa. It further stated that the transaction valued Woowa at $4.0 billion on cash free and debt free terms prior to a few adjustments.
Following this negotiation, the consideration amount consisted of over 1.7 billion euros in cash and around 1.9 billion euros in new shares of the European company.
Delivery Hero had shared its thoughts on anticipating a significant impairment loss on account of the escalated prices of its shares from the duration of signing the transaction in December 2019 to seeking the approval from the Korean Fair Trade Commission.
As per the latest sources, Delivery Hero is now expecting an impairment of up to 1.4 billion euros ($1.7 billion) following its takeover of Woowa Brothers, as the company’s shares have witnessed a rise by 162%, and the consideration share is accordingly appreciated. It also stated that the closing share price on Tuesday reached 128.65 euros, and the amount of impairment was valued at 1.4 billion euros., Apparently, the impairment that was incurred, is neither due to Woowa's performance in operational businesses nor cash issues.
Source Credits: https://www.nasdaq.com/articles/delivery-hero-gets-regulatory-approval-in-south-korea-for-jv-with-woowa-brothers-2021-02