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Delivery Hero’s sale of its South Korean unit, Yogiyo, may take longer than expected, raising the possibility of applying for an six-month extension to the initial deadline.

Delivery Hero and Morgan Stanley, which manages the sale process, have narrowed down the list of bidders for Yogiyo, industry sources said on Tuesday. Strategic investors including Shinsegae Group and private equity firms MBK Partners and Affinity Equity Partners participated in the preliminary round of bidding held last week.

Delivery Hero has put Yogiyo on the market earlier this year in compliance with the conditions put forward by the Korea Fair Trade Commission (KFTC) last year to close its acquisition of Yogiyo's bigger rival, Baedal Minjok.

However, the fact that this is a fire sale in compliance with the KFTC’s ruling is considered as a factor that reduces attractiveness. Some market insiders pointed out that Delivery Hero acquired Baedal Minjok with Yogiyo's low market share in mind.

Possible information leaks on the target have been the biggest discount factor for this sale. Delivery Hero has a good understanding of the weaknesses and strengths of Yogiyo, and will remain in the same industry with Baedal Minjok, a factor that could significantly weaken the appeal of Yogiyo for investors.

The seller distributed information memorandum to potential buyers including strategic investors and domestic and foreign private equity firms last month. But interests in the Yogiyo sale have somewhat cooled down as ecommerce giant eBay Korea has been put on the market.

Prospective buyers, which are weighing up whether to finish the race, are expected to the key to striking the deal. Delivery Hero has until August 5 to divest Yogiyo. The company will be under tight timeline if the sale process is delayed due to the demand for additional due diligence or potential buyers’ possible pulling out of the deal.

The KFTC can give one six-month extension to the deadline only under certain circumstances.

Some market insiders said it won’t be easy to close the deal even if the KFTC grants the extension. The KFTC will impose penalty if the sale is not completed in a maximum of one year.

Delivery Hero seeks 2 trillion won ($1.78 billion) for its Korean unit while potential buyers want it for 1 trillion won. (Reporting by Seon-young Kim)