(Nov 28): Delivery Hero SE is facing pressure from several large shareholders to conduct a strategic review amid increasing consolidation in the food-delivery industry, people with knowledge of the matter said.
Investors including Hong Kong hedge fund Aspex Management, which is Delivery Hero’s second-biggest shareholder with a stake of more than 5%, are pushing management to consider a sale of the company or parts of its business, the people said. The pressure comes amid weak stock performance for Delivery Hero, whose shares have fallen about 50% over the past year and nearly 90% from a 2021 peak.
Shares of Delivery Hero jumped as much as 15% in Friday morning trading. They were up 13% at 11.53am in Frankfurt, putting the company on track for the biggest daily gain in more than four months and giving it a market value of €5.9 billion.
Singapore-based Broad Peak Investment Advisers, Switzerland’s PSquared Asset Management and at least one large US fund have separately expressed their frustration with what they see as Delivery Hero’s lack of progress in streamlining its loss-making operations and boosting shareholder value, some of the people said. Although Delivery Hero has unsuccessfully tried to shed businesses including the sale of its Taiwan unit to Uber Technologies Inc, the investors are calling for a broader strategic approach to trimming its portfolio, they said.
“This is the first real concrete sign of pressure on the management and supervisory boards to act,” Barclays plc analysts led by Andrew Ross wrote in a research note on Friday. “Our sense from speaking to the investor community in recent weeks is that the sentiment around a strategic review and asset sales being needed is shared relatively broadly.”
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Delivery Hero or some of its units could attract interest from competitors like Chinese internet giant Meituan, Singapore’s Grab Holdings Ltd or Uber if they were put up for sale, according to the people. Delivery Hero’s Korean business Baedal Minjok, which is the country’s biggest food delivery app, is among the assets seen as particularly attractive.
Disgruntled investors that own more than 5% of Delivery Hero could call for a shareholder meeting and withdraw support for the company’s management under German regulations. While such a vote is largely symbolic, losing a shareholder confidence vote can be seen as a black mark for executives.
Dubai-based asset manager Ajeej Capital, which has a stake in both Delivery Hero and its listed Middle Eastern unit Talabat Holding plc, has separately expressed concerns about a persistent disconnect between the companies’ strong fundamentals and their depressed market valuations, some of the people said.
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The moves come as Delivery Hero’s largest shareholder, Prosus NV, has vowed to significantly reduce its 27.4% stake by August 2026 to allay antitrust concerns over its acquisition of Just Eat Takeaway.com NV.
Barclays’ Ross wrote “it is likely there is movement of some sort in the next few months,” given the time pressure from the deadline for Prosus to sell its stock and the upcoming annual general meeting in June. A sale of Delivery Hero’s Southeast Asian markets, Korean business or Latin American operations would be the most logical, with the Korean unit being the most meaningful asset to divest in terms of “moving the needle”, he said in the research note.
If Delivery Hero can get a decent price for an asset, it would make sense to sell in order to realise some value, improve the capital structure and have some more funds for stock buybacks, Ross wrote. He has an “overweight” rating on the stock with a target price of €38.10, indicating the potential for it to roughly double from current levels.
“Depending what was sold and to who, it could also be the first step in the whole company being broken up over time,” he said.
Representatives for Aspex, Broad Peak, PSquared, Ajeej, Delivery Hero, Grab, Prosus and Uber declined to comment. Meituan didn’t immediately respond to emailed queries. A Talabat spokesperson said the company’s focus “is on growing our business in a sustainable way, and our recent quarterly performance proved we are achieving solid financial results”.
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