Uber stokes monopoly fears with plan to pay almost $1bn for its only major food delivery competitor in Taiwan

2 months ago

Uber Technologies Inc. is buying Delivery Hero SE’s Foodpanda business in Taiwan for $950 million, shoring up its control of a key Asian market as it seeks to expand in the region.

Uber, whose meal delivery business outperformed globally during the most recent quarter, aims to complete the all-cash deal by the first half of 2025. The acquisition, one of Taiwan’s largest outside of the chip industry, also marks a retreat for Delivery Hero from Asia. Both parties stressed the takeover was contingent on regulatory approval — a potential wrinkle given Uber and Delivery Hero are now the two dominant players in the market.

Foodpanda and UberEats have been neck-and-neck in Taiwan’s food delivery space for years. As of August 2023, Foodpanda maintained a slight lead with 52% of food delivery order volume compared to UberEats, according to data from Measurable AI, a Hong Kong-based firm that tracks business receipts.

The deal unveiled Tuesday marks one of the biggest takeovers in Taiwan outside of semiconductors. Uber aims to combine the two businesses under the Uber Eats brand, and separately agreed to purchase $300 million of newly issued Delivery Hero stock. Delivery Hero said it hoped to use the proceeds from the deal to buy back convertible bonds.

Delivery Hero shares surged 19% to €30.08 at 9:47 a.m. in Frankfurt trading after earlier surging as much as 22%, the biggest intraday gain since February. The shares have gained 20% this year.

Uber is grappling with uncertainty over its ridesharing businesses in the US and Latin America. Gross bookings in the first quarter missed analysts’ estimates, while rivals including Lyft Inc. and DoorDash Inc. beat Wall Street’s expectations last quarter. Investors are focused on whether Uber can sustain double-digit growth with new product offerings.

Yet the delivery business, which has also seen moderating overall growth, proved a bright spot in the January to March period, surpassing expectations on gross bookings. Order frequency reached an all-time high.

Uber Eats has grown in major international delivery markets including Australia, France and Mexico, while adding new retail and grocery partners to its platform. A nascent but growing advertising business has also helped expand margins for the delivery business.

Consumers and sellers alike were concerned about the potential merger of two dominant platforms, Taiwan’s Fair Trade Commission Vice-Chair Chen Chih-min said, local media outlet UDN reported. The agency will “prudently handle” the case to avoid restricting competition, UDN cited Chen as saying.

Foodpanda generated a gross merchandise value of about €1.6 billion and broke even on an adjusted basis over the 12 months ended March, the companies said in their statement.

Its parent has sought buyers for Foodpanda businesses beyond Taiwan, with less success. In February, the German company said negotiations to sell some of its operations in Southeast Asia had fallen through.…Read more by Bloomberg, Sarah Zheng, Chien-Hua Wan


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