European food-delivery giant Delivery Hero has agreed to buy a South Korean rival for $4 billion, heating up the global battle to meet growing consumer demand for delivered meals. Online food-delivery businesses around the world are joining forces and attracting investment as more consumers opt to have their meals brought to their homes or offices, with A,azon.com Inc. and Uber Technologies Inc. joining the fray in recent years. Asia in particular is seen as a hot market, where a rising middle class offers hundreds of millions of potential new customers. However, tapping that potential is costly and companies have struggled to make a profit. Fierce competition has food-delivery startups racing to sign up restaurants, hire motorcycle delivery drivers and offer discounts on popular dishes. They also need to spend big on advertising to convince consumers to try a relatively novel way of purchasing food. Delivery Hero on Friday said buying Woowa Brothers would help it better compete and expand across Asia, as well as solidify its position as the largest food-delivery platform outside of China by number of orders.

The deal comes amid a flurry of consolidation in the sector. Dutch firmsTakeaway.com NV and Prosus NV are battling to buy U.K. food-delivery platform Just Eat PLC—a firm now valued at more than $6 billion—while Amazon recently invested in another British high flier, Deliveroo. Seoul-based Woowa, which launched in 2010, is South Korea’s largest online food-delivery service. The company, which does business under the brand name Baedal Minjok, has more than 8 million monthly active users and fulfilled 365 million orders in the 12 months ended September. Despite the presence of several platforms in the region, Woowa founder Bongjin Kim said the South Korean market was “still in the very early stages of development,” with the majority of customers ordering food by phone. As more consumers across Asia get online and grow accustomed to e-commerce and digital payments, investors are betting they will also turn to apps for sustenance. To fund the fast-growing industry, investors poured $8.2 billion into food-delivery startups in 2018, according to PitchBook, a market-intelligence firm. Asia has been a particularly popular focus for investment, with various local and international platforms vying for growth. Southeast Asia, home to 600 million people, is particularly competitive. Grab Holdings Inc., which last year bought Uber’s business in the region, has a popular service called GrabFood. Earlier this year Grab raised $1.46 billion from Japan’s SoftBank Group Corp. in a deal that valued the company at $14 billion. It competes with Indonesia’s Gojek, which counts Alphabet Inc.’s Google among its investors. Uber said in September it was ending its food operations in South Korea amid intense competition from rivals. Uber Eats does still operate in India, where it competes with Swiggy—part owned by Prosus—and Zomato, which is backed by Ant Financial Services Group, an affiliate of China’s Alibaba Group Holding Ltd. Food-delivery services in China also have deep-pocketed backers, including Tencent Holdings and Alibaba. Berlin-based Delivery Hero isn’t the only European platform expanding in Asia. London-based Deliveroo operates in various markets and has opened a kitchen service in Singapore for multiple restaurants where customers order through its app and dine under one roof. Earlier this year it raised $575 million in a funding round led by Amazon to fuel expansion. However, that deal has since attracted scrutiny from Britain’s antitrust watchdog. At the same time, Deliveroo has pared back some of its business in Europe, closing its operations in Germany earlier this summer, where it faced stiff competition from Takeaway.com’s Lieferando brand, as well as Delivery Hero. – Source: The Wall Street Journal.