Uber Technologies Inc. ended the trading week on a down note, with shares closing at $71.82 on Friday, a decline of 2.43%. The drop capped a weekly slide of approximately 4.4%, driven by news that the ride-hailing giant has made a preliminary takeover approach for Delivery Hero at €33 per share. The offer, which is not yet a firm bid, was confirmed by the German food delivery company over the weekend.
The timing of the announcement, coming just before the Memorial Day holiday weekend, means that U.S. equity markets will be closed on Monday, May 25, delaying any immediate investor reaction. The New York Stock Exchange will reopen on Tuesday, allowing traders to assess the implications of Uber's proposal. The €33 indicative price is roughly 1.76% below Delivery Hero's last closing price on Friday.
Uber's Growing Stake in Delivery Hero
Uber has been steadily increasing its position in Delivery Hero, recently boosting its stake to approximately 19.5% from 7%, according to Reuters. This makes Uber the largest shareholder in the Berlin-based company. The move has intensified speculation about a potential full takeover, though Uber has stated it does not plan to increase its stake to 30%, a threshold that would trigger a mandatory offer under German regulations.
Delivery Hero emphasized in its statement that it remains focused on its ongoing strategic review and cautioned that the announcement does not constitute an offer or a solicitation to buy securities. The company's board is expected to evaluate the proposal carefully.
Market Context and Analyst Views
The broader U.S. market showed modest gains on Friday, with the Dow Jones Industrial Average up 0.58%, the S&P 500 gaining 0.37%, and the Nasdaq Composite rising 0.19%. Uber's decline contrasted with this positive tone, reflecting investor caution about the potential deal. Berenberg analyst Wolfgang Specht noted that Delivery Hero's investment case "may have materially changed" following Uber's increased stake, suggesting that valuations should now account for takeover scenarios.
The food delivery sector remains highly competitive, with reports that DoorDash has also held discussions with Delivery Hero investors regarding a possible deal for the company's Middle East operations, including Talabat and HungerStation. This adds another layer of complexity to the strategic landscape.
Uber's Financial Performance and Outlook
Despite the deal-related uncertainty, Uber's core business continues to perform strongly. In its first-quarter earnings report on May 6, the company posted 20% year-over-year growth in trips, reaching 3.6 billion. Gross bookings rose 25% to $53.7 billion, while revenue increased 14% to $13.2 billion. For the current quarter, Uber expects gross bookings between $56.25 billion and $57.75 billion, with non-GAAP earnings per share in the range of $0.78 to $0.82.
Uber CFO Balaji Krishnamurthy emphasized the company's commitment to capital discipline, noting investments in autonomous vehicles and artificial intelligence as key growth drivers. The Delivery Hero bid, however, raises questions about whether Uber can balance expansion with its stated focus on profitability.
What Lies Ahead
When markets reopen on Tuesday, investors will be watching closely to see how Uber shares react. The key question is whether the market views the Delivery Hero approach as a strategic move to consolidate the food delivery space or as a costly bet that could strain Uber's financial discipline. Regulatory hurdles also loom, as antitrust authorities in Europe and elsewhere may scrutinize any combination.
For now, the €33 offer price remains a starting point, and Delivery Hero's response will shape the next chapter. With both companies navigating a fast-evolving industry, the coming weeks promise to be pivotal for investors in both UBER and Delivery Hero.
