Delivery Hero receives written regulatory approval from the KFTC and is likely to recognize an impairment loss due to the increased Delivery Hero share price

Delivery Hero receives written regulatory approval from the KFTC and is likely to recognize an impairment loss due to the increased Delivery Hero share price

03 Feb 2021

 by Press Team

Berlin, 3 February 2021 – Yesterday in South Korea, the Korea Fair Trade Commission (“KFTC”) provided Delivery Hero SE (“Delivery Hero”) with its written decision confirming its conditional regulatory approval of the joint venture with Woowa Brothers Corp. (“Woowa”), the operator of South Korea’s largest online food delivery platform. The approval is essentially subject to the conditions announced on December 28, 2020, including the divestiture of Delivery Hero’s South-Korean subsidiary Delivery Hero Korea LLC. (“Yogiyo”). The objective is to close the transaction during March 2021.

Delivery Hero announced the strategic partnership with Woowa on December 13, 2019. The transaction valued Woowa at USD 4.0 billion (EUR 3.6 billion) on a cash free and debt free basis, before certain adjustments. The consideration was agreed to consist of up to approximately EUR 1.7 billion in cash and up to approximately EUR 1.9 billion in new Delivery Hero shares, based on the back-then average share price of EUR 47.47.

As a result of strong operational performance, the Delivery Hero share price – and therefore the value of the consideration – has increased significantly since signing the transaction in December 2019. If this continues to be the case until closing, Delivery Hero will, despite Woowa’s continued strong operational development, have to recognize a significant impairment loss on the goodwill of the Korean business immediately or in timely proximity to closing the transaction (in accordance with International Financial Reporting Standards – IFRS). 

The size of the potential impairment will depend on the Delivery Hero share price on the day of closing. Based on yesterday’s XETRA closing share price of EUR 128.65, the potential impairment could amount to up to EUR 1.4 billion. The impairment is neither due to the performance of Woowa’s operational business, nor cash relevant. It does not change the initially envisaged dilution of shares in Delivery Hero.

Please find further information on the partnership with Woowa and the KFTC’s regulatory approval in the following press release published on December 28th, 2020.

Delivery Hero announced the strategic partnership with Woowa on December 13, 2019. The transaction valued Woowa at USD 4.0 billion (EUR 3.6 billion) on a cash free and debt free basis, before certain adjustments. The consideration was agreed to consist of up to approximately EUR 1.7 billion in cash and up to approximately EUR 1.9 billion in new Delivery Hero shares, based on the back-then average share price of EUR 47.47.

As a result of strong operational performance, the Delivery Hero share price – and therefore the value of the consideration – has increased significantly since signing the transaction in December 2019. If this continues to be the case until closing, Delivery Hero will, despite Woowa’s continued strong operational development, have to recognize a significant impairment loss on the goodwill of the Korean business immediately or in timely proximity to closing the transaction (in accordance with International Financial Reporting Standards – IFRS). 

The size of the potential impairment will depend on the Delivery Hero share price on the day of closing. Based on the company’s recent share price performance, the impairment could be of material size. Based on yesterday’s XETRA closing share price of EUR 128.65, the potential impairment could amount to up to EUR 1.4 billion. The impairment is neither due to the performance of Woowa’s operational business, nor cash relevant. It does not change the initially envisaged dilution of shares in Delivery Hero.

Please find further information on the partnership with Woowa and regulatory approval in this press release published on December 28th, 2020, and in this ad-hoc release published on February 3rd, 2021.