Uber has initiated a bid to acquire Delivery Hero, providing the German company with a $14.8 billion equity value in a strategic move to establish the largest food delivery group outside China amid increasing competition from US and European counterparts. This acquisition is a significant step for the US-based ride-hailing company to expand its global food delivery presence, particularly in the face of mounting competition from Just Eat and DoorDash.
The proposed transaction, subject to complex regulatory scrutiny, aims to create a platform spanning 99 countries with a combined pro-forma gross merchandise value (GMV) of $236 billion by 2025, as stated by Delivery Hero. Compared to China’s Meituan, which recorded a platform GMV of about $246.5 billion last year, this merger is poised to substantially enhance market reach.
Uber’s CEO, Dara Khosrowshahi, emphasized the potential of the deal, stating that it would nearly double the markets where both mobility and delivery services are offered, ultimately delivering long-term value for customers and shareholders.
The acquisition, contingent on a minimum acceptance level of 50 percent plus one share, is expected to be finalized in the latter half of the following year. The offer of €41.50 per share represents a premium of approximately 34 percent over Delivery Hero’s three-month average share price and 9 percent over the previous day’s close.
While Delivery Hero’s shares initially surged in premarket trading following the announcement, the stock later experienced fluctuations, reflecting ongoing challenges associated with the deal, including potential antitrust concerns due to market overlap.
As part of the agreement, Delivery Hero will divest part of its business covering 14 markets to US-based investment firm SSW Partners for about €1.4 billion, aiming to facilitate regulatory approval. Major shareholder Prosus has also agreed to sell its stake, leaving minimal room for price renegotiation or alternative suitors.
Despite the positive outlook for the deal, analysts foresee a lengthy approval process ahead, suggesting a “long slow march” to completion due to potential antitrust inquiries. Delivery Hero’s strategic decision to join forces with Uber signifies a pivotal move to enhance future competitiveness in the fiercely competitive food delivery industry.
Founded in 2011 in Berlin, Delivery Hero has expanded globally through acquisitions, establishing itself as a leading player in the food delivery sector. The company’s collaboration with Uber is seen as a strategic alignment to secure long-term growth prospects, emphasizing the significance of scale in a competitive market environment.
Uber’s commitment to invest €2 billion in Germany by 2031 and maintain Delivery Hero’s Berlin headquarters and staff until at least 2029 underscores the company’s dedication to fostering a strong partnership and ensuring operational continuity.
