Uber in $15 billion deal for Delivery Hero to create global takeout giant
Berlin: Uber agreed on Thursday to buy Germany’s Delivery Hero for an equity value of $14.8 billion to create the largest food delivery group outside China and fend off growing competition from U.S. and European rivals.
The acquisition advances the US ride-hailing firm’s efforts to build a global food delivery business that can better compete with Dutch group Prosus’ Just Eat and its aggressively expanding US rival DoorDash.
The merger is likely to face a complex regulatory process as it will create a platform covering 99 countries with a combined pro-forma gross merchandise value (GMV) of $236 billion in 2025, according to a statement by Delivery Hero.
By comparison, Chinese giant Meituan recorded a platform GMV of approximately 1.67 trillion yuan ($246.5 billion) last year.
“Together, we will nearly double the number of markets where we offer both mobility and delivery services,” Uber CEO Dara Khosrowshahi said in a joint statement.
‘Long slow walk’ expected for approval
Uber, currently Delivery Hero’s largest shareholder, conditioned the acquisition on a minimum acceptance threshold of 50% plus one share.
The transaction, supported by Delivery Hero’s management and supervisory board, is expected to be completed in the second half of next year.
The offer of 41.50 euros per share represents a premium of approximately 34% to Delivery Hero’s three-month volume-weighted average share price, it said. It was 9% above Wednesday’s close but almost 40% above the “pristine” price before any deal talks began.
Shares of Delivery Hero were up about 1.2% at 11:41 GMT, while Uber US gained 1% in premarket trading.
The deal will expand Uber Eats into Europe, the Middle East, Asia and Latin America but is expected to face antitrust scrutiny due to overlapping operations.
To alleviate these concerns, Delivery Hero will sell its operations in 14 markets to US investment firm SSW Partners for approximately €1.4 billion. Major shareholder Prosus also agreed to sell its approximately 17% stake, leaving little room for a rival bid.
But Jefferies analysts said the expected timing for completion of the deal points to a “long, slow walk” ahead.
“Using a financial investor to avoid antitrust questions could be successful, but the long timeline to completion (2H27) suggests this will not be a straightforward review,” analysts wrote.
Consolidation years
Food delivery outside China has transformed from a fragmented, pandemic-era battleground of regional players into a highly concentrated market dominated by a handful of global operators.
The consolidation is driven by a slowdown in orders from the peaks of the pandemic, as well as pressure to boost margins at a time of increased regulatory scrutiny over the treatment of gig workers.
This spurred Uber to acquire Postmates in recent years; DoorDash to catch up with Wolt and Deliveroo; Just eat to merge with Takeaway.com and acquire Grubhub; and will expand with deals such as Delivery Hero, Glovo and foodpanda.
The latest deal leaves Uber and DoorDash as the dominant players.
Excluding overlapping markets, the move will expand Uber’s food delivery network from 50 markets to 99 markets. It will also own a business whose gross bookings last year were about $42 billion.
Delivery Hero, which also owns Talabat and PedidosYa, had rejected an earlier Uber approach, announced in late May, that valued it at around €10 billion, or €33 per share.
Anticipation of increased bidding pushed its shares close to €36 in the weeks that followed. Overall, the stock is up 62% this year.
Joining forces is the ‘right move’
Kristin Skogen Lund, Chairman of the Supervisory Board of Delivery Hero, pointed out the importance of scale in a “competitive” industry and said, “Joining forces with a strong partner is the right move to best secure Delivery Hero’s future competitiveness.”
Founded in Berlin in 2011, rapid acquisitions made Delivery Hero one of the world’s largest food delivery companies, but it pulled out of some markets and focused on profits.
Uber on Thursday committed to investing €2 billion in Germany by 2031 and agreed to retain Delivery Hero’s Berlin headquarters and workforce until at least 2029.
Uber has access to about 60 million monthly active users, particularly in markets where it has a limited presence, said Adam Ballantyne, an analyst at Cambiar Investors, which owns shares in the ride-hailing firm.
“These new countries are creating years of additional organic growth for Uber by penetrating ride and meal packages and expanding Uber One subscription growth.”
