key takeaways:
- Uber is in advanced talks to acquire Delivery Hero and could reach a deal this week at a valuation above its recent 36-euro share price.
- The deal will further strengthen food distribution after pandemic-era growth slowed and competition, labor costs and shareholder pressure increased across the sector.
- Any deal faces potential antitrust scrutiny as Uber and Delivery Hero overlap in parts of Europe and the Middle East.
Ride-hailing giant Uber Technologies Inc. is in advanced talks to acquire German food-delivery company Delivery Hero SE, people familiar with the matter said.
Uber aims to reach a deal with the delivery hero as soon as this week, according to the people. Some said a transaction would value the German group well above its recent trading price of about 36 euros a share.
Delivery Hero shares have surged nearly 62% this year, giving the company a market value of 11.2 billion euros ($12.8 billion). Uber has already built up a shareholding of 24.99% in Delivery Hero, plus derivatives which takes its total interest to about 36.8%.
Uber had previously approached Delivery Hero with an offer of 33 euros a share, but investors were betting a higher price would be needed to seal the deal. Amsterdam-listed internet investment firm Prosus NV also has a significant stake in Delivery Hero.
Any deal is likely to be scrutinized by antitrust regulators globally. Delivery Hero has a presence in more than 60 markets, and the company and Uber overlap in parts of Europe and the Middle East.
Uber had previously approached Delivery Hero with an offer of 33 euros a share, but investors were betting a higher price would be needed to seal the deal. (Stephen Wermuth/Bloomberg)
Discussions are ongoing and a deal could still be delayed or broken, the people said, speaking on condition of anonymity because the information is private. Representatives for Uber and Prosus declined to comment. A Delivery Hero spokesperson could not immediately be reached for comment.
strategic review
Delivery Hero is conducting a strategic review after pressure from shareholders, including Aspex Management, the hedge fund that succeeded in ousting founder Niklas Ostberg and has lobbied for more asset sales.
This comes as the food delivery sector is tightening globally due to slow growth and intense competition. Several of Delivery Hero’s competitors in Europe have been targeted. DoorDash Inc. last year agreed to buy UK’s Deliveroo Plc, while Prosus acquired Just Eat Takeaway.com NV.
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Other contenders are studying Delivery Hero or some of its assets. DoorDash and Saudi Arabian instant delivery startup Ninja have separately expressed interest in part or all of Delivery Hero’s Middle East business, people familiar with the matter said.
Business for food delivery providers grew rapidly during COVID-19 lockdowns, prompting rapid expansion and investment, but slowed dramatically when restaurants and grocery stores reopened. Increased regulatory scrutiny of so-called gig workers, treated as independent contractors without the same rights and protections as full-time employees, has also made labor more expensive.
Uber Freight is ranked 16th on Transport Topics Top 100 list of the largest logistics companies in North America.
Written by Ryan Gould, Ike Henning, Vinici Chan and Loni Prinsloo
