Uber said to be in advanced talks on Delivery Hero takeover

[BERLIN] Ride-hailing giant Uber Technologies is in advanced talks to acquire German food-delivery company Delivery Hero, people familiar with the matter said.

Uber aims to reach an agreement with Delivery Hero as soon as this week, according to the people. A transaction would likely value the German group well above its recent trading price of around 36 euros per share, some of the people said. 

Shares of Delivery Hero have gained about 62 per cent this year, giving the company a market value of 11.2 billion euros (US$12.8 billion). Uber has already built a shareholding in Delivery Hero of 24.99 per cent, plus derivatives that take its total interest to about 36.8 per cent.

Uber has previously approached Delivery Hero with an offer of 33 euros per share, but investors have been betting that a higher price will be required to seal the deal. Amsterdam-listed internet investment firm Prosus NV also holds a significant stake in Delivery Hero.

Any deal is likely to attract scrutiny from antitrust regulators globally. Delivery Hero has a presence in more than 60 markets, and the company and Uber overlap in parts of Europe and the Middle East. 

Deliberations are ongoing and a deal could still be delayed or fall apart, the people said, asking not to be identified because the information is private. Representatives for Uber and Prosus declined to comment. A spokesperson for Delivery Hero couldn’t immediately be reached for comment.

Delivery Hero has been conducting a strategic review following pressure from shareholders, which include Aspex Management, the hedge fund that succeeded in ousting founder Niklas Östberg and has lobbied for more asset sales.

This comes as the food delivery sector consolidates globally, driven by slowing growth and heavy competition. A number of Delivery Hero’s peers in Europe have been targeted. DoorDash agreed to buy the UK’s Deliveroo last year, while Prosus acquired Just Eat Takeaway.com NV.

Other suitors have been studying Delivery Hero or some of its assets. DoorDash and Saudi Arabian quick delivery startup Ninja have separately expressed interest in part or all of Delivery Hero’s Middle East business, people with knowledge of the matter have said. 

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Business surged for food delivery providers during Covid-19 lockdowns, prompting rapid expansion and investment, only to slow dramatically when restaurants and grocery stores reopened. Increasing regulatory scrutiny of so-called gig workers, treated as independent contractors without the same rights and protections as full-time employees, has also made labour more expensive. BLOOMBERG