Delivery Hero Holder Aspex Tells CEO to Sell Units or Leave
(Bloomberg) — Delivery Hero SE’s second-largest shareholder, Aspex Management, is threatening to replace the food delivery company’s management if it doesn’t proceed with the sale of certain assets.
“Our expectation is that you identify all assets for which Delivery Hero is not the best owner and operator and where the sale of such assets produces higher value,” Aspex wrote in a letter to Delivery Hero’s Chief Executive Niklas Östberg.
Single-country divestitures or sales of minority stakes in businesses would not go far enough, Hong Kong-based Aspex wrote in the letter seen by Bloomberg News. The letter states that Aspex owns approximately 9.2% of Delivery Hero shares.
Delivery Hero said in December it was evaluating options to improve finances and operations. Bloomberg News has previously reported that the company is facing pressure from investors including Aspex to conduct a strategic review at a time of increasing consolidation in the food distribution industry, which operates on razor-thin margins.
In its letter to Östberg, Aspex wrote that there were broad-based doubts among shareholders about whether Delivery Hero was conducting a strategic review with sufficient urgency or seriousness.
“Absent a clear short-term commitment to these actions and a credible strategic reset that clarifies value, we will consider all legal remedies,” Aspex wrote. “This specifically includes initiating steps aimed at ultimately changing the company’s leadership.”
Delivery Hero’s shares have fallen by almost a third in Frankfurt trading over the past 12 months, giving the company a market value of around 5 billion euros ($5.8 billion).
“We welcome dialogue with shareholders and share their commitment to unlocking shareholder value,” Östberg said in an emailed statement Friday. “As we have stated, we are evaluating all strategic options as part of the review, and that is our primary focus at this time, along with JPMorgan as our advisors.”
He said the recent share price performance did not accurately reflect the performance of the business but a number of processes and negotiations were currently taking place.
Aspex also claimed that Delivery Hero’s profitability is lower than its peers because the company operates in so many countries. Delivery Hero, which operates in more than 70 countries, according to its website, previously tried and failed to spin off its regional businesses, including its Taiwan unit, to Uber Technologies Inc.
“While almost all global food delivery and express commerce players have successfully focused on their geographic footprint to optimize profitability and sustainable free cash flow, Delivery Hero continues to operate in a multitude of countries and markets, ‘investing’ significant cash flow to maintain market shares in its portfolio,” Aspex wrote.
The investor added that Delivery Hero’s expanding geographical footprint has led to an alarming accumulation of legal provisions and legal-related contingent liabilities exceeding €1.4 billion.
“Management has exposed the business and its shareholders to a completely unacceptable level of risk,” Aspex wrote.
—With help from Isolde MacDonogh.
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