Uber launches $15b bid for Delivery Hero

Uber launched a takeover bid for Delivery Hero on Thursday, giving the German ​firm a $14.8 billion equity value in a move that would create the largest food-delivery group outside China as competition with US and European rivals ‌heats up.

The acquisition advances the US ride-hailing firm’s efforts to build a global food-delivery business as it faces intensifying competition from Just Eat, owned by Dutch group Prosus, and US rival DoorDash, which has been expanding aggressively.

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The transaction, which is likely to face a complex regulatory process, would create a platform spanning 99 countries with combined pro-forma gross merchandise value (GMV) of $236 billion in 2025, Delivery Hero said ​in a statement. By comparison, China’s giant Meituan recorded a platform GMV of about 1.67 trillion yuan ($246.5 billion) last year.

“Together, we’ll nearly double the number of markets ​where we offer both mobility and delivery services,” Uber CEO Dara Khosrowshahi said in the joint statement. The deal’s aim was to boost long-term value for customers and shareholders.

‘LONG SLOW MARCH’ TO APPROVAL EXPECTED

Uber, already Delivery Hero’s tab top shareholder, has made the acquisition conditional on a minimum acceptance threshold of ​50 percent plus one share.

The transaction, supported by Delivery Hero’s management and supervisory board, is expected to be completed in the second half of next year.

The €41.50 per-share offer represents a ​roughly 34 percent premium to Delivery Hero’s three-month volume-weighted average share price, it said. It was 9 percent above Wednesday’s close, but nearer 40 percent above the “undisturbed” price before any deal talk started.

Shares in Delivery Hero, which closed at €38.18 on Wednesday, were up around 5.7 percent in premarket trading in Frankfurt but dipped shortly after opening to recover slightly and trade up about 0.45 percent at 0946 GMT — a reflection of ​ongoing hurdles facing the deal.

Acquiring Delivery Hero would expand the Uber Eats network in Europe, the Middle East, Asia and Latin America, but would also attract attention from ​antitrust regulators given the overlap in the companies’ presence.

Tech giants at the China International Supply Chain Expo showcased their latest gadgets at the event’s first-ever artificial intelligence zone.

As part of the agreement, Delivery Hero has agreed to sell part of its business covering 14 markets to US-based investment firm SSW Partners ‌for about €1.4 billion, hoping to smooth the path for regulatory approval.

Major shareholder Prosus has also agreed to sell its stake of just under 17 percent, which along with approval from the German firm’s management leaves little room for shareholders to push for a price bump or another suitor to emerge.

Jefferies analysts, however, said that the expected timing of the deal’s completion could point to a “long slow march” ahead.

“The use of a financial investor to get ahead of the antitrust questions could prove successful, though the long timeline to completion (2H27) suggests it ​won’t be a straightforward review,” its analysts wrote.

Delivery ​Hero, which owns brands including foodpanda, ⁠Talabat, Glovo and PedidosYa, had first disclosed a takeover proposal from Uber in late May that valued it at about €10 billion, or €33 per share, an offer it deemed as too low.

Its shares traded near €36 in the following weeks as investors anticipated an improved ​bid. The Berlin-based company has gained about 62 percent this year.

JOINING FORCES IS ‘THE RIGHT MOVE’

“Joining forces with a strong partner now is ​the right move for ⁠Delivery Hero to best secure its future competitiveness,” Supervisory Board Chair Kristin Skogen Lund said, pointing to the importance of scale in a “competitive” sector.

Founded in Berlin in 2011, Delivery Hero expanded rapidly through a series of acquisitions that made it one of the world’s largest food-delivery companies, though it has retreated from some markets under pressure from investors to focus on ⁠profits.

Uber has pursued ​acquisitions to accelerate its growth after a pandemic bump, buying US food delivery service Postmates for $2.65 billion ​in 2020 to strengthen its position in the United States after shelving an attempt to acquire Grubhub.

For its part, Uber has committed to invest €2 billion in Germany through 2031 and agreed to retain Delivery Hero’s Berlin ​headquarters and workforce until at least 2029.