Delivery Hero in $1.25 bln deal with Uber for foodpanda Taiwan sale

Asia has become Delivery Hero’s biggest market after its $4 billion deal in South Korea in 2019 but the company has been trying to divest some of its assets in the region to improve profitability.

While food delivery services in Asia have largely rebounded from a slowdown following the pandemic boom, many firms are now grappling with thin margins as they spend heavily in offering discounts and promotions to retain consumers who have become wary of rising inflation and cost of living.

Under the deal, Uber will take over the foodpanda business in Taiwan for $900 million in cash and purchase $300 million in newly issued shares of Delivery Hero at 33 euros each, a 30% premium to its closing share price on Monday.

The U.S. company expects the acquisition to contribute at least $150 million annually to the adjusted core profit of its delivery business within a year of the deal’s closing, which is likely in the first half of 2025.

Online food delivery platforms represent a small fraction of Taiwan’s competitive food delivery market but the foodpanda operations in the island were break-even in terms of adjusted core earnings in the last 12 months ended March 31, the companies said.

The business processed transactions worth 1.6 billion euros ($1.73 billion) during that period.

Reuters