Uber To Buy Delivery Hero In $14.8 Bn Mega Deal

Uber on Thursday made a public bid to acquire Delivery Hero in a transaction valuing the German food-delivery business at $14.8 billion, Reuters reported.

The transaction would establish the biggest food-delivery business globally outside China. Operating across 99 nations, the combined entity expects a pro forma gross merchandise value of $236 billion in 2025, the companies stated.

The acquisition advances the global expansion efforts of the US ride-hailing firm in the food-delivery business. It aims to counter intensifying competition from rivals such as DoorDash, which has been expanding aggressively abroad.

Terms, Market Reaction

The US firm will pay €41.50 ($47.58) in cash for each share. This price is about 34% higher than the three-month volume-weighted average share price of Delivery Hero before the announcement, the firm stated.

Uber wants at least 50% plus one share to complete the deal. Delivery Hero shares closed at €38.18 on Wednesday and climbed about 5.7% in Frankfurt premarket trading. However, the stock fell soon after the opening bell, trading down roughly 1% at 0727 GMT.

The US ride-hailing giant already controls almost 37% of Delivery Hero through derivatives and other financial instruments.

To boost this position, major investor Prosus agreed to divest its holding of slightly below 17%, Uber stated. This tendering agreement pushes Uber's total financial stake in the German firm past 53%.

Regulatory Strategy, Commitments

Buying the German firm would expand the Uber Eats footprint across Latin America, Asia, Europe and the Middle East. However, the shared geographic footprint of both players will likely draw scrutiny from competition watchdogs.

To ease these antitrust concerns, Delivery Hero agreed to divest its business in 14 markets to US investment firm SSW Partners for approximately €1.4 billion. This asset sale aims to resolve market overlap and facilitate regulatory clearance.

Uber pledged to spend €2bn in Germany by 2031. The US firm also promised to keep the Berlin head office and staff of Delivery Hero until 2029 at least.

The proposal has the backing of the supervisory and management boards at Delivery Hero. Both bodies plan to advise investors to approve the transaction once they evaluate the official tender documents.

Outlook and Timeline

Delivery Hero Supervisory Board Chair Kristin Skogen Lund addressed the need for consolidation. He said the delivery market is highly competitive and a partnership among strong players is the "right move" for the company to secure its position, according to the report.

The German firm confirmed on Tuesday that it was in late-stage talks about a possible buyout. The parties expect to complete the transaction in the second half of next year.