Uber’s strategic purchase: Acquisition of Delivery Hero

Uber has announced a deal that is historic by the company’s standards, yet for the moment the share price has remained unmoved. Is the market right to treat the company’s strategic purchase with indifference, or are Nvidia’s results and the upcoming Jackson Hole event diverting attention away from a company that is “average” by developed market standards?

The transaction

Uber is set to buy around EUR 13 billion worth of Delivery Hero shares at a price of EUR 41.5 per share. It is worth noting that Uber is buying the company at a 108% premium to the market price, and many analysts do not rule out an increase in the offer price.

Also important, this is not an abrupt pivot or an impulsive purchase. Uber already owns about 53% of Delivery Hero shares, both directly and through various financial and investment vehicles.

A lot about the market’s reaction to the transaction can be inferred not so much from Uber’s share-price reaction (or lack of it), but also from Delivery Hero’s valuation itself. DHER is still trading at a discount to Uber’s offer price, which in practice means the market is pricing in a fairly meaningful discount due to likely regulatory hurdles.

A merger of companies of this size may clearly concern representatives of, among others, antitrust authorities.

What Uber gets out of it

The core of Uber’s expansion strategy is to build a so-called super app. Even today, Uber handles a wide range of passenger transport services and has a developed business as an intermediary in restaurant meal delivery.

The scale would be enormous. After the merger, the companies would operate in as many as 99 countries, and the number of markets with full integration of transport and delivery services would increase from 34 to 58. The scale of expansion here could, hypothetically, be much greater than a mere linear increase implied by taking over the other company’s market share, due to scale effects and synergies.

Sector implications

If Uber’s purchase of Delivery Hero goes through, it would signal significant expansion and an acceleration of the consolidation trend among ride-hailing and delivery operators. Consolidation is good for companies, though not necessarily for consumers.

The consolidation happening today was, in a way, the industry’s goal from the very beginning, when investors tolerated many years of losses before companies were able to even break even, justified by future profits. This was the case, for example, with Uber itself.

Further market consolidation will reduce competition, enabling higher margins which, over time, may fund additional acquisitions and or shareholder payouts.

Technical analysis: Uber (D1)

The share price has experienced a significant correction from the most recent peak, reaching roughly 35%. Even so, the defense of a key rising trendline around $65 suggests that the lower end of the ongoing correction may (but does not have to) be behind us. On the other hand, concern may be raised by the “death cross” from late 2025, which turned out to be merely a trigger for further declines. Overall, the company’s technical picture remains mixed, and the relationship between the EMA100 and EMA200 will be key to monitor. Source: xStation5