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(Bloomberg) -- Deliveroo Plc will close its Hong Kong business after weak sales and mounting competition in the city weighed on the company’s international division.

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The London-based delivery company will sell some assets to rival Foodpanda, owned by Delivery Hero SE, and close other assets, it said in a statement on Monday. The app will remain active in Hong Kong until April 7.

Deliveroo has faced stiff competition and price wars in Hong Kong from Foodpanda and KeeTa, a subsidiary of Chinese food delivery giant Meituan. Success in China has let Meituan expand aggressively, with growing operations across Asia and the Middle East where it typically enters markets with steep discounts. The Chinese super app’s share price has more than doubled in the last 12 months to give it a market value of more than HK$1.06 trillion ($136 billion).

Deliveroo shares rose 2% to 127.6 pence at 10:30 a.m. in London trading giving it a market value of £1.96 billion ($2.5 billion). Delivery Hero shares fell 1.3% in Frankfurt. Meituan shares fell 4.7% in Hong Kong.

KeeTa launched in Hong Kong in 2023 and quickly took market share through heavy promotions. Deliveroo had focused on higher-end restaurants with premium prices and struggled to thrive there. The city is “one of the most discount sensitive markets in Deliveroo’s portfolio,” and KeeTa was able to “muscle it out of the market through discount spend,” according to analysts at Panmure Liberum.

What Bloomberg Intelligence Says:

Deliveroo’s sale of part of its Hong Kong business to Delivery Hero’s Foodpanda and closure of the rest reflects market consolidation amid intense competition from Meituan’s KeeTa and Foodpanda. KeeTa’s 2023 entry with deep pockets fueled a price war, squeezing out Deliveroo. As part of a broader strategy to exit unprofitable markets, this move aligns with Deliveroo’s focus on profitability and cash flow in a market operating at an Ebitda loss.

— Tatiana Lisitsina, BI retail analyst

KeeTa’s average order value for food delivery is about HK$120, that’s roughly HK$60 lower than Foodpanda and Deliveroo’s orders, according to Measurable AI, an analytics firm that tracks receipts. Deliveroo’s Chief Executive Officer Will Shu had ruled out running “endless promotions” to compete in Hong Kong earlier this year after competition dragged down fourth-quarter performance at the company’s international division.