Ride-hailing and food delivery giant Uber (UBER) is reportedly looking at a full takeover of rival Delivery Hero (DLVHF) to help grow its food business outside of the U.S. According to Bloomberg, Uber is working with advisers to look at ways to increase its stake and has spoken with other Delivery Hero investors about a possible deal. Uber recently said that it owns 19.5% of Delivery Hero, plus another 5.6% through options, after building the position quickly with help from investment bank Morgan Stanley (MS).
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However, a takeover is not certain. Uber said it does not currently plan to raise its stake to 30% or more, but it also said it regularly reviews its investments and could buy more if an attractive opportunity comes up. If Uber crosses certain ownership levels, it may also need antitrust approval. Delivery Hero’s other major shareholders include Prosus (PROSF), with about 16.8%, and Aspex Management, with roughly 14.4%, while Morgan Stanley holds a 30% interest mostly through equity swaps. Notably, Delivery Hero shares have risen nearly 50% in Frankfurt this year, giving the company a market value of about €10.2 billion.
The main reason Uber may be interested is because Delivery Hero operates in more than 60 countries. That could help Uber compete more directly with DoorDash (DASH) and its Wolt business in international markets. Berenberg analyst Wolfgang Specht said Uber’s larger stake may have changed the investment case for Delivery Hero, making a possible takeover worth considering. At the same time, Delivery Hero is already under pressure to improve its finances, review its strategy, and run the business more efficiently.
Is UBER Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on UBER stock based on 26 Buys, two Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average UBER price target of $104.64 per share implies 44% upside potential.
