Uber is in talks to acquire food delivery company Deliveroo. Uber has stated that  they want to expand in the food delivery segment. Delivery Hero (DHER GY), Just Eat (JL/ LN) and Takeaway (TKWY NA) are all companies active in the space and could potentially be plays in future m&a deals in this sector.

Bloomberg reported on the 21st of September that Uber is looking to acquire Deliveroo to add to its food delivery business UberEats. Deliveroo is one of Europe’s biggest food delivery companies. Bloomberg writes;

A bid for London-based Deliveroo, last valued at more than $2 billion, would mark a major attempt by Uber to dominate the food delivery business in Europe. An acquisition price is unknown. Any offer would need to be considerably above its latest valuation, according to people with direct knowledge of the Deliveroo plans.

Uber’s CEO Dara Khosrowshahi stated earlier this year at the DLD conference in Munich that he expects UberEats to be the largest food company in the world this year. He told Kara Swisher of Recode;

Uber’s food delivery business is on pace to be the largest food delivery business outside of China. The former Expedia CEO said Eats doesn’t need any acquisition for its UberEats business but will be opportunistic in the future.

With Uber’s IPO planned for 2019, it appears the company has stepped up its efforts to expand through both m&a and JVs. Earlier this summer, Uber was in initial talks to merge its Middle Eastern business with local company Careem Networks.

As Uber (and presumably rivals) are looking to expand their delivery business globally, we suggest looking closer at; Delivery Hero, Just Eat and Takeaway as these companies are the main competitors. All the above could be potential targets or acquirers as m&a in the space picks-up.

Initially all of the companies reacted negatively to the report of Uber’s approach to acquire Dilveroo as the market feared they would face a deep pocket competitor in Uber.

Just Eat suffered the biggest losses as it is mostly active in markets Deliveroo and UberEats are active within. Delivery Hero traded less bad. Takeaway closed unchanged on the day and do note Takeaway is only active in countries that UberEats does not cover. It could be an interesting opportunity overall as competitors might also become take over targets. Below is break-down of revenues for the various companies.

Source: Sensor Tower, Morgan Stanley

Both Delivery Hero and Just Eat share prices have recently suffered as margins have been suppressed by the continued heavy logistics investments. Potential m&a in the sector makes them companies to add to the m&a radar.

Below is a chart of; Just Eat (white), Delivery Hero (orange) and Takeaway (yellow).

Source: Bloomberg