Ride-hailing giant Uber (UBER.US) is in advanced discussions to acquire German food delivery platform Delivery Hero, with an agreement potentially being reached as early as this week, according to people familiar with the matter.
The sources indicate that Uber is keen to finalize a deal promptly. Should an agreement be reached, the valuation of Delivery Hero is expected to be significantly above its recent trading price of around 36 euros per share.
So far this year, Delivery Hero's share price has risen approximately 62%, giving the company a current market capitalization of about 112 billion euros, equivalent to roughly 128 billion US dollars.
Uber already holds approximately a 24.99% stake in Delivery Hero and has further increased its economic interest to around 36.8% through derivatives.
It is understood that Uber previously made an offer of 33 euros per share, but the market widely believes a higher bid will be necessary to secure a deal.
Aside from Uber, Dutch internet investment firm Prosus NV is also a significant shareholder in Delivery Hero.
Given that Delivery Hero operates in over 60 markets globally, overlapping with Uber's business in parts of Europe and the Middle East, any finalized deal is anticipated to face scrutiny from antitrust regulators in multiple jurisdictions worldwide.
The sources also noted that negotiations are ongoing, and the deal could potentially be delayed or fall through altogether.
Both Uber and Prosus have declined to comment on the matter, while Delivery Hero has not yet responded to media requests for comment.
In recent years, under pressure from shareholders, Delivery Hero has been conducting a strategic review to optimize its portfolio of assets.
Hedge fund Aspex Management, one of the company's shareholders, successfully pushed for the departure of founder Niklas Östberg and continues to advocate for the sale of more assets to enhance shareholder returns.
Global Industry Consolidation
Concurrently, the global food delivery industry is entering a phase of consolidation. As the rapid growth benefits from the pandemic era fade, competition intensifies, and expansion slows, major platforms are increasingly turning to mergers and acquisitions to bolster their market positions.
Last year, US-based delivery platform DoorDash (DASH.US) agreed to acquire British food delivery company Deliveroo Plc, while Prosus completed its acquisition of Just Eat Takeaway.com NV, further accelerating industry integration.
Furthermore, certain assets of Delivery Hero have attracted interest from other potential buyers. Previous reports indicated that both DoorDash and Saudi instant delivery startup Ninja have expressed interest in acquiring part or all of Delivery Hero's Middle Eastern operations.
Market Forces Driving Change
Analysts point out that the food delivery sector experienced explosive growth during the COVID-19 pandemic due to lockdown measures, prompting platforms to expand rapidly and increase investment.
However, as restaurants and supermarkets have reopened, industry growth has notably decelerated. Simultaneously, increased regulatory focus in many countries on protecting gig economy workers' rights has raised labor costs for companies.
These factors are collectively driving the industry towards mergers and acquisitions as a strategy to improve operational efficiency and navigate the evolving market landscape.
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