(Bloomberg) — Uber Technologies Inc. is buying Delivery Hero SE’s Foodpanda business in Taiwan for $950 million, tightening its grip on a key Asian market as it seeks to expand in the region.
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Uber, whose meal delivery business outperformed globally during the most recent quarter, aims to complete the all-cash deal by the first half of 2025. The acquisition, one of Taiwan’s largest outside the chip industry, also marks a setback for Asia’s Delivery Hero. Both parties emphasized that the acquisition was dependent on regulatory approval – a potential problem given that Uber and Delivery Hero are now the two dominant players in the market.
Foodpanda and UberEats have been side by side in the food delivery space in Taiwan for years. As of August 2023, Foodpanda maintained a slight lead with 52% of food delivery order volume compared to UberEats, according to data from Measurable AI, a Hong Kong-based company that tracks business revenue.
Uber is facing uncertainty regarding its ride-sharing businesses in the US and Latin America. Gross bookings in the first quarter fell short of analysts’ estimates, while rivals such as Lyft Inc. and DoorDash Inc. beat Wall Street expectations in the latest quarter. Investors are focused on whether Uber can sustain double-digit growth with new product offerings.
Read more: Uber reservations are lost on early holidays, weak regional demand
However, the delivery business, which also recorded moderate global growth, proved to be a positive point in the period from January to March, exceeding expectations in terms of gross bookings. Order frequency has reached an all-time high.
Uber Eats has grown in key international delivery markets, including Australia, France and Mexico, while adding new retail and grocery partners to its platform. A nascent but growing advertising business also helped expand margins in the delivery business.
The deal revealed on Tuesday marks one of the biggest acquisitions in Taiwan outside of semiconductors. Uber intends to combine the two businesses under the Uber Eats brand and has separately agreed to buy $300 million in newly issued shares in Delivery Hero.
Consumers and sellers were concerned about the potential merger of two dominant platforms, said Taiwan Fair Trade Commission Vice Chairman Chen Chih-min, local media outlet UDN reported. The agency will “handle the case prudently” to avoid restricting competition, Chen said, citing UDN.
Foodpanda generated gross merchandise value of around 1.6 billion euros and reached break-even on an adjusted basis over the 12 months ending in March, the companies said in their statement.
Its parent company has sought buyers for Foodpanda’s business outside of Taiwan, with less success. In February, the German company said that negotiations to sell some of its Southeast Asian operations had failed. On Tuesday, Delivery Hero said it expected to use proceeds from the deal to repurchase convertible bonds.
Read more: Delivery Hero says negotiations to sell Foodpanda have failed
(Updates with comments from Taiwan regulator in third paragraph.)
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