Uber Technologies NYSE:UBER, a U.S. ride-hailing company with a food-delivery business, has agreed to acquire Delivery Hero (DELHY), a German food-delivery company operating across international markets, in a transaction valuing the business at $14.8 billion. Uber will offer 41.50, or about $47.60, for each Delivery Hero share and acquire its operations across 50 markets, subject to regulatory approval. The offer represents a roughly 26% increase from Uber's original 33-per-share proposal in May. Delivery Hero shares have gained about 68% this year and were little changed at 38.28 in Frankfurt on Thursday, while Uber shares rose slightly to $73.42 before trading opened in New York. Uber already owns a direct stake of approximately 25% in Delivery Hero, giving the company an existing financial interest in the business before the proposed takeover.
The acquisition is expected to expand Uber's global presence to 99 markets from 79, strengthening its position across Asia, Latin America and the Middle East. Uber plans to finance the transaction with its own cash and new debt and has secured a 14 billion bridge loan to support the purchase. Prosus, a significant Delivery Hero shareholder, will sell its entire 16.8% stake as part of the deal. Uber has also committed to retaining Delivery Hero's Berlin headquarters and corporate workforce until at least 2029 and intends to invest approximately 2 billion in Germany through 2031. Chief Executive Officer Dara Khosrowshahi told analysts that Uber plans to focus on cross-selling its ride-hailing and food-delivery services in Korea and the Middle East, while Chief Financial Officer Balaji Krishnamurthy said the companies' shared back-end architecture could allow Uber to move more quickly after receiving the required approvals.
Regulatory scrutiny may be the biggest near-term issue for the transaction because Uber and Delivery Hero have overlapping food-delivery operations in Europe. SSW Partners, an investment firm co-founded by former executives from Lazard, Quadrangle Group and Goldman Sachs Group, will separately acquire 14 markets for approximately $1.6 billion and operate the businesses until buyers are found. The assets include operations in Austria, Norway, Spain and Sweden, while additional carve-outs involving Turkey and possibly Italy, Spain and Portugal could help address competition concerns. Regulators are also expected to examine labor practices and data protection as part of their review. The proposed acquisition follows continued consolidation in food delivery after DoorDash, a rival delivery company, agreed to acquire UK food-delivery company Deliveroo last year, while Prosus reached an agreement to buy online food-ordering company Just Eat Takeaway.com. Investors may view the deal as a sizable international expansion for Uber, although regulatory approval and the integration of Delivery Hero's operations could remain important factors in determining the transaction's eventual value.