[비즈한국] As the ownership of Korea’s No. 1 delivery platform, Baedal Minjok (Baemin), shifts from Germany’s Delivery Hero (DH) to the global mobility giant Uber, the landscape of the South Korean platform market is set for a total transformation. While Uber has consistently put effort into the Korean market, it had struggled to establish a firm foothold. However, by acquiring Baemin as a subsidiary of its subsidiary, Uber is now positioned to leverage the “Baemin platform” to introduce localized, tailored package products for Korea.
Previously, as Baemin served as a "cash cow" for its former parent company DH, it could not invest aggressively even amid fierce competition among delivery apps. Now that it has been acquired by Uber, there is talk that Baemin may embark on large-scale investments to secure a competitive edge over Coupang Eats.
From Top ‘Profit-Generating Company’ to ‘Advanced Subsidiary for the Korean Market’
Uber, the world’s largest mobility platform, has signed a business combination agreement with Baemin’s parent company, Germany’s Delivery Hero (DH). The core of the deal is a cash tender offer to DH shareholders at 41.5 euros per share. The enterprise value, calculated based on a 100% stake in DH, reaches 14.8 billion dollars (21.9 trillion won).
The acquisition covers businesses operated by DH in 50 markets, including Korea’s Baemin, as well as Talabat and HungerStation in the Middle East, PedidosYa in Latin America, and foodpanda in Southeast Asia. The crown jewel among these is undoubtedly Korea’s Baemin. Valued at 8 trillion won, it has been the undisputed star performer among DH’s business portfolio.
What is noteworthy is the shift in Baemin’s "position" as it becomes an indirect subsidiary of Uber. Under Delivery Hero, Baemin was an overwhelming “No. 1 profit-generating company” and cash cow that propped up its parent company’s chronic deficits.
As of the end of last year, DH’s debt stood at approximately 9.25 trillion won (6.166 billion euros) with a debt ratio soaring to 231.2%, yet the revenue of Woowa Brothers, which operates Baemin, steadily climbed from 3.4155 trillion won in 2023 to 5.2829 trillion won last year. Operating profit also remained consistently stable in the hundreds of billions, recording 592.8 billion won last year, down from 699.8 billion won in 2023. DH focused on funneling these profits to headquarters to compensate for underperformance in other markets, which naturally led to a decline in Baemin's "competitiveness."
However, now that it is nestled in Uber’s arms, its role is highly likely to change into an "advanced, front-line subsidiary" tasked with penetrating the Korean platform market. Based on Baemin’s overwhelming dominance in the Korean market and its cash-generating power, Uber is likely to move to break the monopoly held by Kakao T, the absolute leader in the domestic mobility market.
The dismal performance of Uber Taxi, established by Uber for the local market, illustrates this necessity. Tmap Mobility, an affiliate of SK Group and one of the joint venture partners, sold its 49% stake to Uber and exited the partnership last year. The reason was profitability metrics. Uber Taxi recorded an operating loss of 55.4 billion won last year, with a net loss of 54.2 billion won. After suffering consecutive years of negative revenue and operating losses since its launch, it fell into a state of complete capital impairment by the end of last year.
Should Kakao T be Nervous?
Consequently, the possibility of Uber using “Baemin” to take on Kakao T is being discussed as a top priority. Uber has been investing heavily in the Korean market for a long time. Before forming the joint venture with SK, it entered the market in 2013 with the private carpooling service “UberX,” but withdrew in 2015 due to conflict with the taxi industry. Until recently, rumors even circulated that Uber might acquire Kakao Mobility to enter the Korean market.
This is largely because Kakao Mobility’s stronghold in the domestic taxi-hailing platform market is so firm. Currently, Kakao Mobility (Kakao T) dominates over 90% of the domestic taxi-hailing market, effectively holding a monopoly.
With Uber now embracing Baemin as a subsidiary of its subsidiary, a tectonic shift in the “taxi platform market” appears inevitable. Plans are already being discussed to link the global subscription membership “Uber One” (monthly fee 4,900 won) with Baemin’s “Baemin Club” (monthly fee 5,900 won). A combined product between a delivery platform and a mobility platform has never been seen before, and observers suggest that for those who spend tens to hundreds of thousands of won monthly on taxi fares and delivery fees, it could become a “highly attractive product” depending on the package configuration.
Competition among delivery apps is also expected to intensify. While Coupang Eats has grown rapidly in the market through its WOW membership bundle, Baemin has been hesitant to "invest for defense." Now that it has secured the massive investment power of its "grandfather" Uber, prospects suggest that a race for free delivery may reignite.
A delivery platform industry official predicted, “If Baemin had used its profits for reinvestment all this time, it would have been difficult for Coupang Eats to grow this much,” adding, “If Uber’s ‘capital power’ is injected into Baemin, won’t the tectonic shift in both the taxi platform and delivery platform businesses be significant?”