Uber Technologies, Inc. (UBER.US) acquires Delivery Hero for billions of euros. Citigroup "helps accounting": may release 1.4 billion euros in cost synergies.

Uber Technologies, Inc. has recently proposed to acquire the remaining shares of its European competitor Delivery Hero (DLVHF.US) at a price of 33 per share (approximately $38.29). Citigroup Research estimates that considering Uber Technologies, Inc. already owns approximately 37% of Delivery Hero's shares, completing the full acquisition could unlock cost synergies of up to 1.4 billion, while also providing Uber Technologies, Inc. with access to important food delivery markets in South Korea, the Middle East, and Latin America. Citigroup analyst Ronald Josey stated, "We acknowledge that the acquisition may bring some operational risks, but we believe that with the business operating under a positive background, Uber Technologies, Inc. still has the ability to invest in autonomous driving, food delivery services, and continue advancing its capital return plan." The expected cost synergies are projected to mainly come from sales costs, marketing, and IT expenses, with the majority originating from Delivery Hero's estimated administrative expenditures of up to 2.2 billion in 2027. "Considering Uber Technologies, Inc.'s global technological capabilities that can expand with the acquisition's scale, we note that the potential for IT cost synergies may even exceed its annual IT expenditures of 500-600 million." Josey reiterated his "buy" rating on Uber Technologies, Inc. and recommended investors to take advantage of the current stock price dip to position themselves. Since Uber Technologies, Inc. announced better-than-expected first-quarter results and second-quarter guidance, its stock price has dropped by 10% cumulatively. This further supports his view that Uber Technologies, Inc., with its 50 million Uber One members, expansion into new geographic regions and markets, and the deployment of its autonomous driving strategy in new markets, is expected to continue delivering better-than-expected total booking volume and profit performance. This acquisition drama that could reshape the global food delivery industry is steadily fermenting in the capital markets as bid increments continue. On May 23rd of this year, Delivery Hero officially confirmed in regulatory filings that Uber Technologies, Inc. had sent a preliminary acquisition intention to all shareholders, offering 33 per share, corresponding to an overall valuation of approximately 10 billion (about $11.6 billion). However, this price was even slightly lower than Delivery Hero's closing price that week, leading to collective rejection by shareholders. According to insiders, Uber Technologies, Inc. CEO Dara Khosrowshahi had personally flown to Oslo, Norway to meet with Delivery Hero's board chair, Kristin Skogen Lund, and presented the offer of 33 per share. After being cold-shouldered, Uber Technologies, Inc. then raised the offer to 38 per share for a total valuation exceeding 11.5 billion (approximately $13.39 billion), a premium of about 15.3% - but the offer was still rejected. Several Delivery Hero shareholders explicitly stated that they expect the final acquisition price to be no less than 40 per share, with a total valuation of around 13 billion, representing a premium of approximately 19% over the previous week's closing price. Jefferies Financial Group Inc. analyst Giles Thorne admitted, "Many stakeholders are still insisting on a price level of over 40 per share, predicting the next steps is extremely difficult, especially considering the presence of numerous antitrust concerns." Meanwhile, competitor DoorDash has quietly entered the fray, inquiring about acquisition intentions to Delivery Hero shareholders, although they have not purchased any shares yet, their intentions are clear - especially regarding Delivery Hero's Middle East business segment. As the bidding war intensifies, Uber Technologies, Inc. has quietly completed its equity distribution through a series of clever capital operations. As early as April, Uber Technologies, Inc. purchased approximately 4.5% of Delivery Hero's shares from the Dutch investment group Prosus for 270 million. By May, Uber Technologies, Inc.'s direct stake in Delivery Hero had significantly increased from about 7% to 19.5%, making it the largest single shareholder of this German food delivery giant, with an additional 5.6% in option holdings.