Delivery Hero shares rally on deal to sell Taiwan business, and a stake, to Uber

By Steve Goldstein

Foodpanda business being sold for $950 million

Delivery Hero shares rallied Tuesday as the German-listed food delivery company agreed to sell its Taiwan business, and a minority stake, to Uber Technologies.

Delivery Hero, which operates in 70 countries, agreed to sell its foodpanda business to Uber (UBER) for $950 million, as Uber also agreed to take a $300 million stake in Delivery Hero at a 30% premium to Monday's close.

Delivery Hero shares (XE:DHER) jumped 24% to EUR31.47. Uber shares fell 1% in premarket basis.

Foodpanda was breakeven on an adjusted earnings before interest, tax, depreciation and amortization business through March 31, on gross merchandise value of EUR1.6 billion.

Giles Thorne, an analyst at Jefferies, called the move a "perfectly timed exit" for Delivery Hero, and noted that its exit multiple of 0.6 its GMV compares favorably to the 0.2 multiple of Delivery Hero as a whole.

He notes the deal will face tough antitrust scrutiny in Taiwan, as foodpanda and Uber Eats basically split the delivery market there.

Bernstein analysts led by Nikhil Devnani say the Uber deal will reduce competitive intensity as well as consolidate fixed costs and increase the value of the platform.

"UBER's $300M stake in DHER can payoff irrespective of progress on Taiwan, but it's ultimately a use of capital tied to this deal," they added.

Uber said consumers stand to benefit from the combination of Uber's wider selection across northern Taiwan and in major urban centers with foodpanda's comparative strength in southern Taiwan and in smaller cities.

Uber also said, if completed, it would be one of the largest ever international acquisitions in Taiwan, outside of the semiconductor industry.

-Steve Goldstein

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05-14-24 0835ET

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