Uber (UBER.US) buys Delivery Hero for $14.8 billion! Takeout Market Accelerates “Three Kingdoms”

The Zhitong Finance App learned that Uber (UBER.US) has agreed to acquire Delivery Hero SE, and the deal valued the German takeaway company at 14.8 billion US dollars.

Uber said in a statement on Thursday that it will launch the acquisition at a price of €41.50 (or $47.60) per share and will acquire Delivery Hero's main global business in 50 markets.

As part of the deal, Uber will buy shares in Prosus NV, an important shareholder of Delivery Hero and an Amsterdam listed company.

Investment firm SSW Partners will buy 14 of these markets for approximately $1.6 billion. SSW will separately seek buyers for business units including Austria, Norway, Spain, and Sweden.

The takeaway market, which has boomed and spawned dozens of participants during the COVID-19 pandemic, has been rapidly integrating in recent years. Uber has been making overseas acquisitions to strengthen its international position, and its local rivals, such as DoorDash, are taking similar steps. DoorDash agreed to buy UK Deliveroo last year, and Prosus struck a deal to buy Just Eat Takeaway.com.

Under pressure from shareholders, including Aspex Management, Delivery Hero has been conducting strategic assessments. Aspex Management is a hedge fund that successfully ousted founder Niklas Östberg and has been lobbying for more asset sales.

SSW was co-founded by former Lazard banker Antonio Weiss and Quadrangle Group co-founder Joshua Steiner.

The takeout market has entered the “Three Kingdoms Dingli”

With Uber announcing the full acquisition of most of the global business of German takeout giant Delivery Hero for $148 billion, the consolidation of the global takeout market (excluding mainland China) came to an end. This year's largest merger and acquisition in the local lifestyle service sector not only marks a complete farewell to the blind expansion of the takeaway industry during the pandemic dividend period, but also heralds the official advent of an era of giant domination characterized by high concentration and super app collaboration.

Prior to this acquisition, the global takeout market (with the exception of mainland China) showed a “Sengoku pattern” where US giants fought with local forces. Today, as the wave of mergers and acquisitions progresses, the market is rapidly converging into the three major camps.

With absolute control of over 60% of the US, DoorDash entered Europe through the acquisition of British giant Deliveroo; the Prosus Alliance used platforms such as Just Eat Takeaway.com to forge a tight defense in Latin America and Europe; and through this acquisition, Uber Eats expanded its footprint to 50 new markets and built the world's widest network spanning North America, Europe, the Middle East and Asia Pacific.

Due to the tightening of antitrust regulations, the deal adopted a very smart “divestment” structure: investment agency SSW Partners simultaneously took over 14 overlapping or inefficient markets including Austria, Norway, Spain, and Sweden for $1.6 billion.

The two core dividends of Uber's acquisition

As far as Uber is concerned, the $148 billion consideration is not simply piled up on a large scale; the business logic behind it lies in the marginal effects of market restructuring and the flywheel effect of the Everyday App (Everyday App).

First, achieve a “perfect puzzle” with a very low degree of overlap. Uber's strengths are concentrated in mature markets with high ARPU (average user income) such as the US, Japan, and the UK, while Delivery Hero's core barriers are deeply rooted in high-growth emerging markets such as the Middle East, North Africa, and Asia. The merger of the two had almost no domestic costs of doing business in the same room. Instead, Uber nearly doubled the number of markets that offered both “travel” and “takeout” services. The complementarity of this geographical landscape has brought it excellent risk diversification capabilities.

Second, unleash the ecological collaboration of “travel+food delivery+membership”. This is a “dimensional reduction attack” that is difficult for a single takeout platform (such as DoorDash) to replicate. Uber can directly turn a huge takeout user base into potential ride-hailing business customers, and vice versa. The integrated subscription membership “Uber One” will be seamlessly introduced into these 50 new markets, significantly increasing user lifetime value (LTV) and reducing overall customer acquisition costs. Furthermore, the increase in the density of takeout networks will significantly shorten the delivery radius, optimize the utilization rate of delivery agents, and directly improve the unit economy model.