China-based food delivery giant Meituan is said to be exploring a potential acquisition of Delivery Hero SE’s business in Southeast Asia as the company looks to diversify beyond its domestic market, Bloomberg reported on Friday, quoting people familiar with the matter.
There’s no certainty the discussions will lead to a transaction, and other bidders could emerge. A representative for Meituan didn’t respond to Bloomberg’s 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.
The Wirtschaftswoche business magazine first reported the news, saying Singapore-headquartered super app Grab could pay a little more than 1 billion euros ($1.07 billion) for the unit.
Analysts, however, said then antitrust approval will be the largest hurdle for Grab’s potential acquisition of the business.
“We think antitrust approval will be the biggest hurdle for Grab, while sale to deep-pocketed buyer could disrupt the current competitive landscape,” CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan wrote in a note dated September 21.
“In our view, while it does make sense for Grab to consider such an acquisition given its strong net cash position and potential to enhance its economies of scale, we see significant regulatory hurdles,” the analysts wrote.