Delivery Hero Seeks $4.9 Billion Valuation as IPO Price Set

  • Stock offered at EU22-EU25.50 in Frankfurt share sale
  • Food-delivery startup’s IPO a boon for owner Rocket Internet

What the Amazon Deal Means for Food Delivery Startups

Delivery Hero AG plans an initial public offering valuing the company at as much as 4.39 billion euros ($4.9 billion) as the Rocket Internet SE-backed food-delivery startup seeks funds for growth.

The company and current owners will sell as much as 996 million euros in stock for 22 euros to 25.50 euros apiece, according to a statement Monday. Rocket Internet, the Berlin-based startup incubator led by Chief Executive Officer Oliver Samwer, owns about 35 percent of Delivery Hero.

Shares of Rocket Internet have been rebounding in recent months on expectations of a successful IPO of Delivery Hero, which seeks more funds to compete in the cut-throat restaurant-meal delivery market. The sale would grant a reprieve to Rocket and Samwer, who hasn’t taken a company public since European clothing retailer Zalando SE listed in 2014.

Rocket Internet rose as much as 4.4 percent in early Frankfurt trading, and gained 1.2 percent to 19.77 euros as of 3:23 p.m. local time.

Delivery Hero expects trading to begin on the Frankfurt stock exchange on June 30. The offering is for about 39 million shares, including an over-allotment, and the company said it will have about 172 million shares outstanding after the IPO. The proceeds for Delivery Hero would be 450 million euros at the mid-point of the price range.

The pricing is within investors’ expectations, said Alexander Rummler, an analyst at Oddo Seydler. Delivery Hero is facing margin pressure in Germany, where it competes with Takeaway.com Holding BV, the Dutch company that has announced large investments in the country, Rummler said.

Delivery Hero operates a variety of brands including Lieferheld, Foodora and Foodpanda, through which it either brokers deliveries from restaurants or brings the food to customers’ homes itself, by bicycle. The food delivery sector is notorious for stiff competition, with rivals spending big on marketing to dominate a country because usually, the winner takes all. Delivery Hero is active in 42 markets and partners with about 150,000 restaurants.

It competes with app-takeout services including Just Eat Plc, GrubHub Inc. and Takeaway.com. Newer rivals include Amazon.com Inc., which is expanding its Amazon Fresh same-day grocery delivery offering, and Uber Technologies Inc.’s food-on-wheels service Uber Eats.

Delivery Hero’s value was between 3.5 billion euros and 4 billion euros after a 387 million euro investment by South Africa’s Naspers Ltd. last month, according to a person familiar with the matter. Naspers owns about 10 percent.

Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley are arranging the sale.

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