Uber said to study full takeover of European rival Delivery Hero

Signage for Uber on Toronto’s Bloor Street West on July 11, 2023. Photo by Peter J. Thompson/National Post

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Uber Technologies Inc. is exploring options for a full takeover of Delivery Hero SE, people familiar with the matter said, a move that would help it better compete with DoorDash Inc. outside the U.S.

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The ride-hailing giant this week disclosed it had boosted its stake in Frankfurt-listed Delivery Hero. It’s working with advisers to study ways to increase its holding further, according to the people. Uber has also been speaking to other investors in Delivery Hero about its interest in a deal, they said.

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On Monday, Uber said it owned 19.5 per cent of Delivery Hero after acquiring additional shares and instruments, as well as a further 5.6 per cent in options. Morgan Stanley has helped Uber rapidly build its stake using derivatives, the people said, asking not to be identified because the information is private.

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Shares in Delivery Hero have risen almost 50 per cent in Frankfurt trading this year, giving the company a market value of around €10.2 billion (US$11.8 billion).

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Uber said this week that while it “currently” had no intention to lift its stake to 30 per cent or more, it periodically reviews investments and could buy more if there’s an attractive opportunity.

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San Francisco-based Uber may need to seek antitrust approval before crossing certain ownership thresholds, one of the people said. Deliberations are ongoing and there’s no certainty they will lead to a deal, according to the people.

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Representatives for Uber and Morgan Stanley declined to comment. A spokesperson for Delivery Hero didn’t immediately provide comment.

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Delivery Hero’s other large shareholders include Prosus NV with around 16.8 per cent and Aspex Management with roughly 14.4 per cent, data compiled by Bloomberg show. Morgan Stanley has a 30 per cent interest in Delivery Hero, held mostly through equity swaps, according to a regulatory filing Friday.

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Evaluating options

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Wolfgang Specht, an analyst at Berenberg, wrote in a note that the investment case for Delivery Hero may have materially changed after Uber upped its holding. Specht wrote that it now seemed prudent to include a value for scenarios including a potential takeover.

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Uber has been making acquisitions overseas to strengthen its position internationally, where hometown rivals like DoorDash are making similar moves. Delivery Hero’s presence in more than 60 countries could help Uber have a better view into markets where it’s behind DoorDash’s Wolt unit, which is focused on Europe.

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Berlin-based Delivery Hero, meanwhile, has been evaluating options to improve its finances and operations as investors push the company for a strategic review. Chief Executive Officer Niklas Östberg has decided to step down after pressure from activist Aspex, which had urged him to sell assets or leave.

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Delivery Hero isn’t the only German company that has seen a potential acquirer swiftly build a stake with the help of derivatives. Italian lender UniCredit SpA took a similar approach to amass a significant minority holding in Commerzbank AG before making a full takeover bid; this was done through trades that Morgan Stanley helped execute.

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The U.S. bank also helped Saudi Telecom Co. build a nearly 10 per cent stake in Spain’s Telefonica SA in 2023.

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With assistance from Natalie Lung

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