Uber will spend $900 million in cash to acquire Foodpanda’s operations in Taiwan. Delivery Hero will issue 8.42 million extra shares, which Uber has agreed to buy for $300 million. Following the transaction, Uber would possess approximately 2.98% of Delivery Hero’s new share capital. The firms want to finalize the transaction by the first half of 2025.
Uber announced on Tuesday a $1.25 billion deal to acquire Delivery Hero’s Foodpanda business in Taiwan as well as additional shares in the German firm, boosting the delivery specialist’s liquidity as it faces increased competition in Asia.
Asia has become Delivery Hero’s largest market after its $4 billion transaction in South Korea in 2019, but the firm has been attempting to liquidate some of its holdings in the area to enhance profitability.
While meal delivery services in Asia have mostly recovered from a downturn during the pandemic boom, many businesses are again struggling with thin margins as they spend extensively on discounts and marketing to keep customers who are cautious of growing inflation and the cost of living.
“We need to focus our resources on other areas of our global footprint, where we believe we can have the greatest impact on customers, vendors, and riders,” said Niklas Ostberg, CEO and cofounder of Delivery Hero, in a joint statement.
Under the terms of the agreement, Uber will acquire the Foodpanda company in Taiwan for $900 million in cash, as well as $300 million in newly issued Delivery Hero shares at 33 euros apiece, a 30% premium to Monday’s closing share price.
Online food delivery platforms make up a small portion of Taiwan’s competitive meal delivery market, but Foodpanda’s operations on the island were breakeven in terms of adjusted core earnings in the year ended March 31, according to the businesses.
During that time, the company processed 1.6 billion euros ($1.73 billion) in transactions.
As part of its restructuring, Delivery Hero was looking to sell its Foodpanda company in several Southeast Asian areas. It said in February that it had ended discussions about selling those operations.
Singapore’s competition authority said last month that it investigated the possibility of a merger between Grab Holdings and Delivery Hero, raising concerns about competition in the food delivery business, but closed the matter after the talks fell through.
Last month, Delivery Hero stated that it will continue to look into any potential deals.
According to a report by research firm Momentum Works, Grab and Foodpanda hold over 91% of Singapore’s $2.5 billion food delivery business, with Grab accounting for 63%.
