AsianFin -- Deliveroo Plc has announced it will shut down its Hong Kong operations, citing weak sales and fierce competition in the city as key factors impacting its international division.

The London-based food delivery giant revealed on Monday that it will sell some of its assets to rival Foodpanda, owned by Delivery Hero SE, while closing others.

Following the announcement, Delivery Hero's shares surged by as much as 3.4%, while Deliveroo's shares saw a modest increase of 1%, reaching 126.4 pence.

Deliveroo has struggled to maintain its foothold in Hong Kong due to intense competition and price wars from Foodpanda and KeeTa, a subsidiary of Chinese food delivery leader Meituan. Meituan's aggressive expansion strategy, fueled by its success in China, has allowed it to enter new markets with low prices and steep discounts—a tactic supported by its soaring share price.

KeeTa, which launched in Hong Kong in May 2023, rapidly gained market share from Deliveroo through heavy promotions and discounts. In January, Deliveroo's CEO Will Shu stated that the company would not engage in "endless promotions" to compete in the city, signaling a shift in strategy.

According to Deliveroo's statement, the decision to exit Hong Kong—a market that contributed 5% of its gross transaction value—aligns with its commitment to "disciplined capital allocation." The company also noted that slow growth in the Hong Kong market dragged overall gross sales outside the UK and Ireland down by five percentage points.