What Happened With the Cornershop Acquisition?By MBN Staff | Mon, 06/15/2020 - 14:18
After celebrating Walmart's alleged acquisition in early 2019, the retail giant abandoned the US$225 million agreement to partner with Chilean app Cornershop after antitrust authorities in Mexico blocked the deal. Now, everything seems to be on track for Uber to acquire the online grocery startup.
At the end of May, Chile's National Economic Prosecutor's Office (FNE) unconditionally approved Uber's acquisition of a majority stake in Cornershop. In October 2019, Uber announced its intentions to buy the stake valued at US$450 million, subject to regulatory approvals in Chile and Mexico.
One of the obstacles to carrying out the agreement, according to regulators, were the possible risks of eliminating a potential competitor, given Uber's attempts to enter the supermarket e-commerce sector. However, "this was finally ruled out, as supermarkets would currently find themselves strongly enhancing the development of e-commerce," said the FNE said in a statement. “The operation does not substantially reduce competition and, consequently, cannot negatively affect, in terms of access, price, quantity or quality, the conditions of use of the last-mile service platforms in supermarkets and in the other markets in which parties in Chile participate,” the FNE added.
In Mexico, Uber and Cornershop are still waiting for the Federal Economic Competition Commission (COFECE) to approve the acquisition, which could take place until the end of 2020. The agency must also assess the risks that this acquisition implies for competition in the country. According to analysts, the chances that COFECE will reject the agreement are minimal because, unlike Walmart, Uber does not yet have a share in the retail store market.
“We are awaiting antitrust approval for the Cornershop deal. After this, we will sign and close on the transaction. Until then, we will continue operating it as an independent business. We will receive feedback from retailers and continue to explore other opportunities when they become available,” said Director and General Manager of Uber Eats México José García-Pimentel in an interview with Mexico Business News.
Due to the COVID-19 pandemic, Uber was forced to stop providing its ride-hailing service in several Latin American countries. However, the company reinforced its Uber Eats service in the meantime. In 1Q20, the Uber Eats division gave a big boost to the company's revenue of US$3.543 billion, 14 percent more than in 1Q19.