Uber Mulls Overraising Bid Amid Delivery Hero Rebuff

Uber Technologies (UBER.N) is weighing an increased takeover offer for German food delivery company Delivery Hero (DHER.DE) following a major shareholder’s rejection of a proposal that valued the firm at more than €11.5 billion ($13.39 billion).

This prospective deal would substantially broaden Uber’s international food delivery presence and may spark competitive bidding with competitor DoorDash, which has similarly shown interest in the German firm’s operations.

Key Takeaways

Uber board met Saturday to discuss raising Delivery Hero bid
Initial €38 per share offer rejected by major shareholder
DoorDash also circling Delivery Hero’s Middle East operations

Market Reaction & Context

Shares of Delivery Hero have jumped over 47% year-to-date, substantially outpacing the wider European tech sector amid acquisition rumors¹. The stock finished Friday at €33.59, reflecting approximately a 15.3% premium above Uber’s declined €38 per share proposal.

An emergency board meeting was held by Uber on Saturday to review its takeover offer status, per three sources with knowledge of the situation². The mobility company has already increased its Delivery Hero stake to roughly 19.5% of outstanding shares, establishing itself as the top shareholder with holdings valued at approximately €1.7 billion.

Bidding War Emerges

DoorDash has similarly been reaching out to Delivery Hero shareholders, although it has not yet acquired equity in the business³. The American food delivery company is specifically focused on Delivery Hero’s Middle Eastern assets, including well-known brands Talabat and HungerStation.

Several Delivery Hero investors have suggested they would demand pricing above €40 per share for a full acquisition⁴. Uber’s CEO Dara Khosrowshahi traveled to Oslo this week for discussions with Delivery Hero’s supervisory board chair Kristin Skogen Lund regarding the potential transaction.

Strategic Rationale

The deal would provide Uber entry into Delivery Hero’s broad network spanning over 40 nations, especially in rapidly expanding markets throughout Asia, the Middle East, and Latin America. On Saturday, Delivery Hero confirmed receipt of an official takeover proposal from Uber at €33 per share valuation.

Delivery Hero’s leadership is allegedly evaluating either a complete sale or multiple transactions that would separate the company’s Middle Eastern and South Korean operations⁵. The German firm’s CEO Niklas Oestberg stepped down last week amid pressure from major investors demanding strategic alternatives.

Regulatory Hurdles Ahead

Any prospective deal may encounter substantial regulatory examination due to the market consolidation it would generate in worldwide food delivery services. Both Uber and DoorDash might eventually choose to withdraw their interest if regulatory clearance seems improbable.

This development occurs as Delivery Hero has focused on enhancing profitability following years of substantial losses during its global expansion efforts. The organization has more than 54,000 employees worldwide and runs well-known delivery platforms including Foodpanda, PedidosYa, and Yemeksepeti.

Outlook

Market experts anticipate the bidding competition will escalate in the coming weeks as both American corporations evaluate their strategic alternatives. The result may transform the global food delivery competitive environment, especially in developing markets where Delivery Hero holds dominant positions.

Both Uber and Delivery Hero have not immediately provided responses to inquiries regarding the potential increased offer or decision timeline.

Not investment advice. For informational purposes only.