Uber has finalized a deal to acquire the food delivery operations of Delivery Hero in Taiwan.
The $1.25 billion transaction includes a $950 million cash payment for Delivery Hero’s Foodpanda brand in Taiwan and a $300 million investment for a 3 percent stake in the German-based food delivery group.
This strategic move has already positively impacted Delivery Hero’s stock, which surged by 20 percent following the announcement.
Uber-Delivery Hero deal terms
As part of the agreement, Uber will purchase 8.4 million newly issued ordinary shares of Delivery Hero at a price of €33 each, reflecting a premium of over 30 percent on Delivery Hero’s closing share price on Monday.
This acquisition is seen as a strategic expansion for Uber, which already operates Uber Eats in Taiwan.
The deal is poised to extend Uber’s market reach beyond major urban areas into smaller cities and southern regions of Taiwan where Foodpanda has established a significant presence.
Consolidation in the food delivery industry
The acquisition underscores a period of consolidation in the competitive food delivery industry, which has seen immense growth but also significant financial challenges over the past decade.
Delivery Hero’s CEO, Niklas Östberg, stated that the sale would allow the company to concentrate resources on other global markets where it can make a more substantial impact.
The proceeds from the share sale will be used by Delivery Hero to buy back convertible bonds to improve its capital structure.
Uber, achieving its first full year of operating profitability in 2023, continues to exercise financial discipline, with a focus on profitable deal-making.
This deal comes shortly after Uber’s new partnership with US grocery delivery service Instacart, aimed at enhancing competition with DoorDash in suburban America.
The completion of the Uber and Foodpanda transaction is subject to regulatory approval, with an expected closure in 2025.
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