Shopping platform Meituan has said that it is not interested in acquiring online food and grocery delivery company foodpanda, according to DBS Group Research. As a results, delivery and transport platform Grab saw a key overhang from its stock price removed.
"As we understand, Meituan's management has commented during an investor conference, that they are not interested in acquiring foodpanda business. We have also confirmed this development with Meituan," said DBS.
It added that in its view, delivery-only businesses, excluding Indonesia and Vietnam, where foodpanda does not have a presence, is a sub-scale business, comprising just 5 to 6% of the size of delivery market in China.
"This should remove a key overhang from Grab’s stock price. This has been a key overhang on Grab’s stock price due to the potential entry of a big player like Meituan who could have challenged Grab," it added.
DBS explained that Grab's stock price has corrected by 10% in the last two weeks on rumors of Meituan potentially acquiring the foodpanda business. It said that it expects a relief rally subsequently.
This comes shortly after foodpanda confirmed APAC layoffs amid talks of partial Asia business sale, according to the company when MARKETING-INTERACTIVE reached out in September. This comes amidst a potential sale of its Asia business that was announced by foodpanda's owner, Delivery Hero at the time.
It explained that it was conducting the layoffs because there was a need to "streamline" its operations. "The need to streamline our operations to become leaner and more agile remains critical," a spokesperson at the company said.
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