Grab recently published their 2023 Q4 and FY results, and during its earnings call, COO Alex Hungate confirmed that Grab is not pursuing acquiring FoodPanda. This aligns with Delivery Hero, FoodPanda’s parent, announcement earlier last week that acquisition talks for Foodpanda in Southeast Asia had collapsed.

Why did Grab give up on the potential acquisition of FoodPanda? Was the €1 billion price tag for FoodPanda (that German media quoted) not the “right price” for Grab?

Tune into this latest episode where we dive into the considerations behind Grab’s decision, examine the complexities of mergers and acquisitions, and discuss what’s next for Foodpanda in the region. 

Tune into the full episode here:

Featured materials:

Grab is buying back shares, but not Foodpanda?

Our thoughts on Grab’s 2023 Q4 and Full Year results

Food delivery platforms in Southeast Asia 2024


[AI-generated transcript] 

[00:00:00] Sabrina

Hello everyone. And welcome to episode 62 of the Impulso podcast. So today we’re going to be talking about Grab’s latest financial results, as well as Grab’s confirmation that they will not be acquiring Delivery Hero’s Southeast Asian Subsidy subsidiary Foodpanda. 


[00:00:16] Jianggan

Subsidy. That’s a very common term that we used to refer to food delivery in the region for the last few years. Always subsidies, vouchers, and stuff. 


[00:00:26] Sabrina

It still links the food delivery, you know. 


[00:00:28] Jianggan

I think that’s embedded in your mind, right? When you start thinking about food delivery, when you start saying about sub, and your mind 


[00:00:36] Sabrina

Yeah, I just go to subsidy.


[00:00:37] Jianggan

Subsidy, subsidiary, right? 


[00:00:38] Sabrina

Because you mentioned it so much. Okay, so Last Thursday, Grab released their financial results for the fourth quarter as well as the full year and they recorded their first quarterly profit. And of course, during the earnings call, Grab’s COO, Alex Hungate, also confirmed that they would not be acquiring Foodpanda.


[00:00:56] Jianggan

So that was after the news which was circulating from Delivery Hero a day earlier saying that the deal to Sell Foodpanda Southeast Asia with a potential acquirer had collapsed or something like that? 


[00:01:09] Sabrina

Yes. So since the previous year, I mean Delivery Hero has mentioned that they want to divest their Southeast Asian business, Foodpanda.

And of course there was a lot of speculation of who buy Foodpanda. And then since they announced that they are no longer selling it, and I think. Something Alex Hungate mentioned during the earnings call is that they are confident about Grab’s scale and category leaderships in all markets, and that it says, they would set a very high hurdle when assessing inorganic opportunities.


[00:01:39] Jianggan

Which basically means mergence and, acquisitions.

So I think the rumors or the sort of speculations about all these talks that Delivery Hero is having with different parties about Foodpanda. I think about a year and a half ago, they were talking, I mean, the news saying that they were talking to Lineman about selling the Thai business, which saw a market share decline because of firing of certain employee who attended some rally, which apparently unnerved the population there.

Then last year, there were like talks with Meituan where I think afterwards Meituan came out to say publicly that they would not be pursuing the acquisition. The talk with Grab was particularly interesting because I think it was first leaked by a German newspaper, which said that the discussion with was for a price tag of about 1 billion euros.

And then afterwards they have this strange saga of the former CEO of Asia Pacific and his current or ex or current and ex girlfriend who actually leaked this story on Instagram. And that led to the CEO being replaced. But then you see that over the course of the whole last couple of months Foodpanda actually kept quite quiet about this, right?

They didn’t make any announcement or confirmation or denial about this. So, which means that some discussions will probably ongoing. This time is also quite interesting that Alex Hungate actually mentioned in the earnings call that they will not be pursuing this acquisition, which was quite unusual because usually don’t really talk about rivals that much in your earnings call.


[00:03:13] Sabrina

So it’s interesting. And I think we’ve wrote an article about Grab’s earning call. It’ll be linked in the show notes if you guys want to check it out. And we also have an article about. Title Grab is buying back shares, but not Foodpanda because Grab did announce that they would be buying back about us 500 million of their loans, right?


[00:03:30] Jianggan

So I think they’re authorized to buy back $500 million worth of shares. And they’re also paying back the remainder of the term D loans, which I think if I remember correctly, it’s about 497 million.

So close to 500 million. 

Yeah. So altogether they plan to spend 1 billion dollars in cash or they plan to like, you know part 1 billion dollars of cash, which was fairly close to the price tag of Foodpanda, which was mentioned in the first report last year.


[00:03:56] Sabrina

So in that article, we wrote about the right price, right?

That the cost of acquisition is normally a lot more than just what we see.


[00:04:06] Jianggan

Yeah, I think things like this came out. There has been quite a bit of analysis by different outlets out there about whether Grab needs Foodpanda, would Foodpanda need Grab, or whether there will be a happy marriage or, I think also like a few weeks ago, there was also the speculation of Grab talking to Gojek about potential consolidation. And then afterwards, Gojek came out to deny it is and I’m sorry, GoTo Gojek’s parent came out to deny it. so there’s lots of things going on there. And I think people generally expect some kind of consolidation to happen in the food delivery sector in Southeast Asia.

We have done the sort of market share assessment for the sector, you know, food delivery platforms in Southeast Asia report for the last few years. You could see that at least if you compare Grab to Foodpanda , Grab has been getting market share. I think in all the markets that Foodpanda is operating in.

 At the expenses of Foodpanda, and so the question comes to, and obviously if there’s a merger or there’s acquisition and Grab would eliminate a competitor, a major competitor in those markets that would lead them to be able to focus on consolidating the market and probably improve their profit in this markets yes, they reported their first ever net profit for the last quarter, but I think the management was cautious, right?

They mentioned that this is benefiting from an accounting accrual reversal, which means that they do not fully expect this to be repeated in the next quarter. And at the same time, we’re pushing for operational improvement. . Do you use Foodpanda in Singapore? 


[00:05:42] Sabrina

I don’t use food delivery in Singapore. ’cause it’s expensive.


[00:05:45] Jianggan

Expensive in terms of the food that you buy there is expensive or delivery. 


[00:05:48] Sabrina

The delivery fee. 


[00:05:49] Jianggan

The delivery fee. 


[00:05:50] Sabrina

So I will open the app once in a while. I’ll see the delivery fee. I’ll close the app, I’ll leave my house to go and buy food


[00:05:57] Jianggan

Which is probably healthier option.


[00:05:58] Sabrina



[00:05:58] Jianggan

So if you look at most food delivery in China list, it’s actually cheaper than what you would have got, I mean, offline and sometimes it’s faster because if you go offline, you still have to wait at the restaurant. In Southeast Asia, it’s a bit different. Especially the last few years, last two years, I think the platforms are trying to improve their profitability.

That meant fewer incentives and higher delivery fees. So, that begs the question that, okay. For Grab, if they were to acquire Foodpanda, what exactly does that give them? Right. We have seen acquisitions in the past, right? I mean, of course in Southeast Asia, Grab acquired Uber’s business back in 2018.

I think that was what gave them the food delivery business. . And before that I think there’s also this Alibaba’s acquisition of Lazada. So if you look at Alibaba acquisition of Lazada, then all the layoffs and all the management changes and all the challenges with competition that happened afterwards, you might come to a conclusion that such acquisition can be quite difficult to manage.

But then you look at Grab’s acquisition of Uber. It was basically a situation where both parties have reached a stalemate in terms of market share and nobody can sort of kill each other. And the both seem to still committed to the market that led the investors to be in jitters.

I said, okay, Hey, if you, if two of you consolidate and everyone becomes your shareholders and everyone benefits, that’s what happened in the ride-hailing and food delivery sector earlier. But if you look at the situation now, Grab has been gaining market share from Foodpanda and they are probably very confident about continuing to gain further market share.

So that leads to the question of if they were to buy Foodpanda, I mean, how much is the right price tag? If the objective is to just eliminate competition and there’s additional cost of, you know, having to deal with the regulators and additional uncertainty. And also at the same time they will probably just compare the user base and merchant base of Foodpanda and realize there’s lots of overlap and take the rest of not overlap, which is probably not worth much to Grab for operational point of view.

So how much are they willing to pay for this and do all this consolidation deal with regulators? I would think that if the price is I don’t know, in the range of 10 million, 15 million, they’ll probably be attractive to Grab, but 1 billion, I think for Grab is too expensive.


[00:08:24] Sabrina

So, I mean, Delivery Hero has also announced that they will not be selling Foodpanda anymore, right?


[00:08:30] Jianggan

They said they will be sort of running that as a sustainable business, right? 


[00:08:34] Sabrina

Yes, which leads to the question of, so what’s next for Foodpanda in this region? 


[00:08:39] Jianggan

Interestingly last week I spent two days in Cambodia, in Phnom Penh, where I I was attending a symposium for internet founders.

Yeah, Cambodia, country of 16 million, GDP per capita of 16 hundred. So it’s a fairly small market, but still there is a huge number of internet startups there. And I spoke with two local food delivery platforms and the founders of both. And they talked to me a lot about the tactics that Grab and Foodpanda are using in the market.

And I think both have the same conclusion that Look, Foodpanda leadership doesn’t have the energy to look at the details of that market and how to make that market work. So the person who is leading the market there is just following orders and and pushing for a certain KPI. So if you take it back and Foodpanda is operating so many different markets in Asia, Southeast Asia, part of South Asia, Hong Kong, Taiwan, and et cetera.

So it’s actually a very complex set of markets where the expertise, the product, whatever that we built in a market can’t be easily translated into another market. So, how do they turn this around without selling? I don’t know. I think, if they consolidate a little bit for certain markets where they still have a significant market share, like Malaysia, the Philippines, and Singapore, where they have 30 to 40 percent market share in each of the markets, but they can still kind of make it viable. But that said, I mean, Southeast Asia, the remaining of Asia for them as a whole is less than half of what they are doing. I mean, I’m sorry, what Delivery Hero’s subsidiary Bae Min is doing in South Korea.

So how much effort, time and management attention they can spend on this diverse area of markets is a big question mark. And I think for Delivery Hero as a whole, they also have a very attractive market in the Gulf, the Middle East, Dubai, Saudi Arabia, et cetera, et cetera, where they are absolutely leading. We have been hearing rumors that the Meituan might be looking at that market as the second port of entry outside mainland China, the first was Hong Kong, which they are actually fighting against Foodpandas. So when that happens, I don’t know. I mean, I think if I were the sort of leaders of Delivery Hero, I’m facing with a very complex set of markets that you are operating in.

Each market is so different and each market where you can’t deploy your expertise fully. And basically you need like different funding teams for each market to make it work. So I don’t know. I mean, they can make it sustainable, but are they willing to, does it make sense for them and how to defend Middle East and South Korea, that these are probably bigger worries for them.

Oh gosh, I’ll be ranting.


[00:11:25] Sabrina

Yeah. So I think it’ll be interesting to see what Foodpanda does in the region over the next few years. And of course, I mean, for now they said that they want to focus on making foodpanda self-sustainable instead of selling it. Right. But who knows, maybe in the future TikTok might want to enter.


[00:11:42] Jianggan

Yeah. There have be rumors that TikTok has been talking to acquire some delivery fleets or maybe even Elema, the Alibaba-owned food delivery platform in China. And of course, I think the reason why that deal was not materialized was also because of the price and what exactly they see the value.

I think they only wanted to buy a part of it. And they feel the whole platform was overvalued. And of course, the current owner, Alibaba, in that case, and Delivery Hero, in this case, in Southeast Asia, will see things differently because they’ve invested so much into it. I think a final thought about the market is that there has been some talks about potential monopoly, if, or sort of competition.

If Grab is to absorb foodpanda in the four major markets in Southeast Asia. I don’t know how they define this, right? Because look at Meituan. Meituan is only like 70 percent of the delivery market in China. They find it very hard to raise prices. Because you always have alternatives, which is to, like you said, draw and eat.


[00:12:40] Sabrina

Leave your house and buy food. 


[00:12:43] Jianggan

Yeah, it’s very hard to raise prices and forcing consumers to accept. And none of the platforms in Southeast Asia have reached a scale where they can impose that much power on the merchants because most merchants still derive like vast majority of income from offline.

So yeah, I don’t think there’s a lot of worry about potential monopoly, but of course, I mean, watch dogs and regulators in each market being professionals. They probably have to study that very carefully much more than just our gut feeling, right?


[00:13:12] Sabrina

So thank you for tuning in to another episode of the Impulso podcast.

We hope you guys enjoyed today’s episode. If you do like our podcast and follow us on Spotify, Apple podcast, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech, new retail, and the broader digital economy.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].