(May 23): Uber Technologies Inc has offered to take over Delivery Hero SE in a deal that would value the German delivery company at about €10 billion (US$11.6 billion) as it seeks to ramp up competition with DoorDash Inc outside the US.
Delivery Hero received an approach from Uber for €33 per share, and “remains fully focused on executing its strategic review process,” the Berlin-based company said in a statement on Saturday. That price is three cents higher than Delivery Hero’s closing share price on Thursday, the day before Bloomberg News first reported the talks.
Uber, which owns 20% of Delivery Hero, would be on the hook for about €8 billion under those terms. The US company also has options for another 5.6% of shares, it disclosed on Monday.
Delivery Hero has been conducting a strategic review of its assets following pressure from shareholders. The food delivery business is consolidating globally, driven by slowing growth and heavy competition, and a number of Delivery Hero’s peers in Europe have been targeted. DoorDash, a dominant player in the restaurant delivery market in the US, agreed to buy the UK’s Deliveroo Plc last year. Months earlier, Prosus announced plans to buy Just Eat Takeaway.com NV in the Netherlands.
The Financial Times reported earlier on Saturday that Uber’s offer was rebuffed, with some investors seeking an offer exceeding €40 per share. Delivery Hero shares rose 1.9% to close at €33.59 on Friday. The stock has gained 48% this year, fuelled in part by speculation of asset disposals and a takeover attempt by Uber.
The absence of a premium may pose an opportunity for rival bids. DoorDash has expressed interest in Delivery Hero’s Middle East business, known as Talabat, but has yet to put in an offer, according to a person familiar with the matter. The FT had also reported on DoorDash’s interest previously.
Any bidder will have to contend with the handful of shareholders that control a large percentage of Delivery Hero. Investment company Prosus NV holds almost 17%. Aspex Management, the activists that succeeded in ousting co-founder Niklas Öestberg and have lobbied for more asset sales, own more than 14%.
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Uber has been speaking to other Delivery Hero investors about its interest in a deal, and is working with advisers to study ways to increase its holding further, people familiar with the matter said. Morgan Stanley has helped the ride-hailing company to rapidly build its stake using derivatives, people familiar told Bloomberg.
The company may need antitrust approval before crossing certain ownership thresholds, one of the people told Bloomberg. Deliberations are ongoing and there’s no certainty they will lead to a deal, they said.
Delivery Hero could fetch between US$15 billion and US$18 billion in a deal with Uber, Bloomberg Intelligence analysts Mandeep Singh and Robert Biggar wrote in a note published on Friday, before Uber’s indicative offer was public. They said such a takeover would sharply expand Uber’s footprint in emerging markets, strengthening the US company’s global position.
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