Uber Technologies said on Tuesday that it will pay $950 million in cash to acquire Delivery Hero’s Foodpanda Taiwan branch
The transaction is a component of Uber Eats’ Asian expansion strategy, which aims to bolster the company’s position in Taiwan. However, it also highlights Delivery Hero’s continued withdrawal from that same market, as the transaction coincides with the company’s attempts to divest several of its other Southeast Asian enterprises.
Uber also purchased a share of the Delivery Hero as part of the deal. It plans to acquire $300 million worth of recently issued ordinary shares of the Germany-based company, which provides food delivery services all over the world.
Uber stated that the transaction, among the most significant international purchases to come out of Taiwan, will be finished in the first half of 2025.
According to the announcement, local customers, businesses, and delivery partners of Foodpanda will switch to Uber Eats once it shutters.
The two most extensive meal delivery services in Taiwan are Uber Eats and FoodPanda. A recent estimate states that between January 2022 and August 2023, Food Panda held a 52% market share, while Uber East held a 48% share. Other food delivery companies, including Foodomo and many different fast food delivery applications, have less than 2% and 6% of Taiwan’s market share.
In Taiwan, where there is intense competition, internet meal delivery services still make up a tiny portion of the industry. According to Pierre-Dimitri Gore-Coty, senior vice president of delivery at Uber, “We’re so excited about the opportunity to deliver even greater convenience and value that this transaction would unlock in the years ahead.”
According to Uber, geographic synergies from the deal are anticipated. It stated, “Foodpanda’s comparative strength is in southern Taiwan and smaller cities, compared with Uber’s wider selection across northern Taiwan and major urban centers.”
The market for online meal delivery in Taiwan is expected to grow from $51.3 million in 2024 to roughly $68.5 million by 2029.
As a broader industry, food delivery has undergone many ups and downs. Unit economics and the quest to achieve superior economies of scale in competitive regions have resulted in significant consolidation and the temporary withdrawal of previously globally ambitious firms to their home markets.
This has been particularly unpleasant in the “instant grocery” sector. All in all, billions of dollars raised from many investors have been lost as smaller companies fail or are bought out by larger companies, sometimes for pennies on the dollar. Afterward, those larger companies reduced their operations, as Getir did in April.
According to Bernstein analysts, Uber finds Taiwan’s well-established food delivery sector appealing due to its concentrated topography.
Bernstein’s analysts say, “top-down, GDP/capita levels are good versus Asia broadly, and Uber Eats is well positioned.” They also note that Taiwan has a robust business funnel, with users placing an average of seven orders per month instead of the three to five times that Bernstein claims it typically sees in delivery markets. This implies that it also leads to gross bookings contributed by members.
Delivery Hero, however, stated that it intends to concentrate its Foodpanda business on other markets.
Niklas Östberg, CEO and co-founder of Delivery Hero stated, “The strength of our Taiwanese business is a testament to the hard work of many teams over the last eight years.”
We have determined that to create a service that leads the globe; we must concentrate our efforts on other areas of our worldwide presence where we believe we can make the most significant difference for riders, vendors, and customers. Foodpanda now has an intriguing runway in Taiwan thanks to this purchase, and we wish them the best of luck in their further endeavors.
Delivery Hero ended negotiations with an unidentified third party in February to reduce its Asian footprint. The markets in question were Singapore, Malaysia, the Philippines, Thailand, Cambodia, Myanmar, and Laos.
In Southeast Asia, Delivery Hero’s food delivery business faces competition from Grab. Following its September layoffs, Foodpanda’s discussions to partially sell the company fell through. The goal was to streamline operations.
