Uber offered €33 per share for Delivery Hero, yet Prosus was compelled to sell its stake to Uber at just €20 a share according to PYMNTS under a European Union mandate. This regulatory intervention inflicted a substantial financial loss on Prosus, valuing its asset far below market potential. The EU initially forced Prosus to reduce its Delivery Hero stake to prevent perceived market dominance. However, Prosus now actively seeks to reverse that mandate, despite already executing substantial sales, according to Bloomberg. Prosus's direct appeal and the financial implications of these sales suggest a protracted negotiation or a re-evaluation of the EU's original condition is likely, potentially setting a precedent for future regulatory challenges.
Prosus's Stake and Regulatory Challenge
Prosus reduced its Delivery Hero stake from 27.4% to approximately 17% through two recent sales, partially complying with the EU's mandate, according to Startup Fortune. This reduction met regulatory requirements, yet Prosus retains a substantial minority stake. The company's decision to challenge the EU mandate after these sales suggests a strategic recalculation, likely driven by substantial financial losses incurred through forced compliance.
The Valuation Discrepancy
Uber's €33 per share offer for Delivery Hero starkly contrasted with the price Prosus was compelled to accept for its shares, as reported by PYMNTS. The discrepancy underscores the direct pressure to divest. The EU's mandate cost Prosus significant potential revenue, forcing sales at a discount despite a competitor's higher valuation of the company.
Details of Forced Divestment
Under regulatory pressure, Prosus divested 5% of its stake to Aspex Management and 4.5% to Uber, according to Moneyweb. The sale to Uber involved 13.58 million Delivery Hero shares at €20 each, generating approximately €270 million, as reported by Startup Fortune. Another 5% interest went to Aspex Management at €22 per share, yielding about €335 million, also per Startup Fortune. These transactions involved key market players, with a portion going to a direct competitor. The EU's intervention, intended to prevent market dominance, paradoxically compelled Prosus to sell to Uber, potentially consolidating power rather than fostering broader competition. This enforcement appears to prioritize market restructuring over shareholder value, potentially penalizing companies for compliance.
The outcome of Prosus's appeal to the European Union regarding its Delivery Hero stake will influence future regulatory enforcement actions.
