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Delivery Hero Shares Slip Below Uber's Offer Price Amid Deal-Close Uncertainty
Shares of Delivery Hero AG pulled back from a 52-week high on Tuesday, trading at a notable discount to Uber Technologies' formal takeover offer. The price action reflects investor caution regarding the significant time and regulatory risks associated with the proposed acquisition.
The Takeover Bid
Uber formally launched its voluntary public takeover offer for the Berlin-based food delivery company at €41.50 per share in cash. The bid values Delivery Hero at approximately $14.8 billion, or $13.7 billion when accounting for Uber's pre-existing stake in the company, according to the announcement.
Delivery Hero's Management and Supervisory Boards have unanimously endorsed the offer and stated their intention to recommend it to shareholders. Further bolstering the bid, major investor Prosus has irrevocably committed to tendering its entire 16.8% stake.
Market Prices in Deal Risk
Despite the premium offer, Delivery Hero's stock, after initially surging to €40.35, slipped to trade at €38.85. The gap between the market price and the offer price is a classic merger arbitrage spread, which represents the market's discount for potential deal execution risks.
AdAnalysts point to several factors creating this uncertainty:
- Acceptance Threshold: The transaction is conditional on a minimum acceptance of 50% plus one share.
- Regulatory Scrutiny: The deal is expected to face close examination from antitrust authorities due to overlapping operations in Europe and the Middle East.
- Extended Timeline: The projected closing for the transaction is not until the second half of 2027, a lengthy period that increases uncertainty.
Broader Context
To proactively address anticipated antitrust concerns, Delivery Hero has already entered into an agreement to sell certain businesses, including its Turkish arm Yemeksepeti, to investment firm SSW Partners. This move is part of a broader trend of consolidation within the global food delivery sector as companies navigate slowing post-pandemic growth.
A weaker overall market, with European and U.S. indices trading lower, provided a risk-off backdrop that further weighed on the stock. The pullback indicates that investors are rationally discounting the offer price for the time value of money and the significant hurdles that remain before the deal can be finalized.
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