The Chinese delivery giant Meituan is exploring a potential acquisition of the Foodpanda delivery business in Southeast Asia, as it looks to diversify beyond its domestic market, according to people familiar with the matter.
Meituan has held talks with Delivery Hero, the Germany-based owner of the Foodpanda brand, about an acquisition, the people said, asking not to be identified as the information is private.
There’s no certainty the discussions will lead to a transaction, and other bidders could emerge. A representative for Meituan did not respond to requests for comment, while a spokesperson for Delivery Hero declined to comment.
Founded in 2010, Meituan has become the largest food delivery platform in China. It operates in more than 2,800 cities and counties in the world’s second-largest economy. The tech giant in May started KeeTa, a new food delivery brand, in Hong Kong.
Meituan’s expansion into Southeast Asia would present a challenge for Grab Holdings Ltd, the ride-sharing, food-delivery and fintech super-app that has become the leader in the region.
The 10-year-old Singapore-based company has just reached profitability on an adjusted basis, and Meituan would be a much bigger competitor than Grab’s current regional rivals.
Grab has also been mentioned as a possible candidate to acquire the regional Foodpanda operation.
Foodpanda has a large footprint in Southeast Asia, with about 20% of the region’s 2022 gross merchandise value. Bloomberg analysts see Grab as a better suitor for Foodpanda than Southeast Asian peers Sea and GoTo, which face competition and cash flow risks. A hypothetical deal would raise Grab’s market share to above 70% from 40-50% now, said analyst Nathan Naidu.
In the quarter ended in June, Meituan said revenue grew at the fastest pace since 2021 after dining and travel bounced back from Covid-zero depths despite broader consumer spending malaise.
The company is expanding into adjacent areas from grocery retailing to group-buying. In March, it abandoned a self-operating model for ride-hailing service to cut costs. And it is investing heavily in live-streaming services to fend off rivals like Douyin, the local version of TikTok.
Delivery Hero said in September that it was in talks to sell part of its operation in Southeast Asia, where growth has stagnated since Covid lockdowns eased. A deal would involve divesting the Foodpanda brand in Singapore, Malaysia, the Philippines, Thailand, Cambodia, Myanmar and Laos.