The once upstart food delivery market has officially grown up, as evidenced by the huge valuations — like Delivery Hero's €4.4 valuation post IPO.
— Kristen Hawley
(Bloomberg) — Delivery Hero AG is set to complete Germany’s biggest tech listing in three years, after pricing the highly awaited 996 million euro ($1.1 billion) initial public offering at the top end of its range.
Delivery Hero set a final offer price of 25.50 euros per share, the Berlin-based company said Thursday, at the ceiling of a range projected as low as 22 euros last week. The startup, which connects customers and restaurants via its apps, will start trading Friday in Frankfurt. The price gives Delivery Hero a market value of about 4.4 billion euros, based on the number of shares to be outstanding after the offering.
“The pricing and the valuation are a complete success for Delivery Hero,” Lucas Boventer, an analyst at Warburg Research, said Thursday by phone. The IPO proceeds will give the meals-on-wheels company “enough financial flexibility” for its growth plans, he said.
The strong demand for shares in the company, which competes with app-based takeout services including Just Eat Plc, GrubHub Inc. and Takeaway.com, also is good news for backer Rocket Internet SE, the Berlin-based startup incubator led by Chief Executive Officer Oliver Samwer that owns about 35 percent of Delivery Hero. Rocket Internet rose as much as 1.3 percent in early Frankfurt trading.
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.
Blue Apron Holdings Inc., a New York startup that offers meal-kit delivery service, slashed the projected price range for its IPO to a range of $10 to $11 per share from an earlier target of $15 to $17, pricing its offering at $10 a share Wednesday. Amazon.com Inc.’s acquisition of grocery chain Whole Foods Market Inc. has put pressure on Blue Apron.
Delivery Hero’s offering is for about 39 million shares, including an over-allotment, and the company will have about 172 million shares outstanding after the IPO, it said last week. Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley are arranging the sale.
In addition to Rocket Internet, Delivery Hero’s investors include South Africa’s Naspers Ltd., which acquired an 11 percent stake in May, Insight Venture Partners, and hedge fund Luxor Capital Partners, which owns almost 10 percent of the company.
–With assistance from Gaurav Panchal and Ruth David
©2017 Bloomberg L.P.
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