Delivery Hero Raising Up to $1.6 Billion in War Chest for Deals

(Bloomberg) -- Delivery Hero SE is raising as much as $1.6 billion in a share sale, building a war chest for potential deals as the fight to dominate the food delivery market intensifies.

The German company will sell as many as 9.44 million new shares in an accelerated offering to bolster its cash position and take advantage of “attractive investment opportunities,” it said in a statement. Delivery Hero has gathered enough orders for all the shares on offer, according to terms of the deal seen by Bloomberg News.

Food delivery companies are riding a wave of growth from consumers ordering from home during the coronavirus pandemic, but the sector remains marked by harsh competition and a fight to secure greater market share.

Based on the food delivery company’s closing price on Wednesday, it could raise as much as 1.3 billion euros ($1.6 billion). Shares in this type of transaction are usually sold at a discount. The company’s shares were down 3.5% on Germany’s Tradegate exchange compared to Wednesday’s close on the Frankfurt exchange.

In late 2019 Berlin-based Delivery Hero, which claims to be the largest food delivery provider outside China, announced plans to take majority control of Korea’s Woowa Brothers Corp. at a $4 billion valuation, expanding its foothold in Asia. The investment would help Woowa go up against SoftBank Group Corp.-funded competitor Coupang, which has also invested aggressively in food delivery.

A spokeswoman for Delivery Hero said the Woowa transaction was covered by existing financial resources, adding the new funds are aimed at increasing the company’s financial flexibility more broadly.

JPMorgan Chase & Co. and Morgan Stanley are the global coordinators on the share offering, alongside bookrunners HSBC Holdings Plc and UniCredit SpA.

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