Uber feast marks end of easy food delivery M&A

Doordash

17/07/2026 10:14

(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own. Refiles to fix grammar in paragraph one.
)
    By Aimee Donnellan
    DUBLIN, July 17 (Reuters Breakingviews) - The food delivery
giants' M&A regime may go from feast to famine. On Thursday,
Uber Technologies  UBER.N  agreed to pay $15 billion to snag
Delivery Hero  DHER.DE , a deal that can generate decent returns
thanks to hefty cost savings. But the German group was the last
of the low-hanging fruit in a fiercely competitive sector. Uber,
and rivals DoorDash  DASH.O  and Prosus  PRX.AS , will now have
to scrap for smaller, regional targets, which are unlikely to
offer the same juicy payoff.
In the past two years, there has been a scramble to buy up
delivery competitors in a desperate bid for scale. Last year,
the $101 billion Dutch tech investor Prosus, which also has a
Latin American food business, bought Just Eat Takeaway.com for
€4.1 billion. A few months later, the $81 billion DoorDash spent
$3.9 billion buying Deliveroo having already bought Wolt for $8
billion ​in 2022. Then this week, Uber got in on the action,
snapping up Delivery Hero after Prosus was forced to sell down
its stake due to European competition concerns.
The deal certainly looks attractive for Uber. The $151 billion
ride sharing and delivery company reckons it can extract $1.2
billion worth of synergies from the combination, including
halving the amount it needs to spend to win new customers. Add
those savings to €860 million of operating profit analysts
polled by LSEG expect Delivery Hero to deliver by 2030, and Uber
could expect a nearly 10% annual return, after tax, on the €15
billion outlay including debt. That's quite a bit above Delivery
Hero’s 8% cost of capital.
Scale matters in food delivery. The more customers a company
gains, the easier it is to sell other products like groceries or
holidays. Uber estimates that punters that buy multiple products
on its platform make three times as many bookings as those that
just hail rides. But DoorDash commands nearly two-thirds of the
lucrative U.S. market, dwarfing Uber's 26% and Grubhub's 8%.
Uber has therefore looked abroad, pursuing a European
acquisition with an edge in Asian markets to cut costs and claw
back a competitive edge. 
    An inevitable slowdown in the sector's hitherto rapid
expansion will also force delivery groups to keep consolidating.
DoorDash's revenue growth is expected to cool from nearly 29%
this year to just under 17% in five years, according to analysts
polled by Visible Alpha. Uber's delivery business faces a
similar slowdown, with growth projected to fall from 25% to 13%
over the same period.
    The snag is that many Western markets are already
concentrated among the two, or three big players. Even Uber's
Delivery Hero acquisition will require substantial disposals to
win EU trustbusters approval. The takeaway giants will have to
prey on smaller regional groups like Yassir in Africa, Rappi in
Latin America, Swiggy in India, and potentially the $15 billion
Grab in Southeast Asia. But these targets offer thinner
synergies and, given their rapid growth, richer valuations. From
here on, food delivery M&A will only get trickier and pricier.
     
Follow Aimee Donnellan on LinkedIn.
     
    CONTEXT NEWS
    Uber Technologies agreed on July 16 to buy Germany's
Delivery Hero for $14.8 billion to create the largest
food-delivery group outside China.
    The transaction, supported by Delivery Hero's management and
supervisory board, is expected to be completed in the second
half of next year.
    The €41.50 per-share offer represents a roughly 34% premium
to Delivery Hero's three-month volume-weighted average share
price, it said. It was 9% above the company's closing share
price on July 15. 
    The deal would expand Uber Eats across Europe, the Middle
East, Asia and Latin America, but is expected to face antitrust
scrutiny due to overlapping operations.
    To ease those concerns, Delivery Hero will sell operations
in 14 markets to U.S. investment firm SSW Partners for about
€1.4 billion. Major shareholder Prosus has also agreed to sell
its nearly 17% stake.
    Shares in Delivery Hero were trading at €38.16 by 0806 GMT
on July 17. 

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(Editing by Neil Unmack; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can
click on  DONNELLAN/ Aimee.Donnellan@thomsonreuters.com))