Delivery Hero sells German Lieferheld to Takeaway.com

Berlin. (dhh) Delivery Hero S.E. signed transaction documentation with Takeaway.com N.V. and one of its affiliates pursuant to which Delivery Hero will sell its German food delivery businesses Lieferheld, Pizza.de and foodora to Takeaway.com in exchange for cash and an equity stake in Takeaway.com N.V. (= Naamloze Vennootschap) – both companies announced on 2018-12-21.

Under the Transaction, Delivery Hero will sell the outstanding shares in Delivery Hero Germany GmbH and Foodora GmbH (together, «Delivery Hero Germany») to Takeaway.com for a total consideration of circa EUR 930 million («Consideration») consisting of cash and shares in Takeaway.com N.V.. The Consideration will comprise of EUR 508 million in cash and 9.5 million shares in Takeaway.com N.V. worth circa EUR 422 million[1], representing circa 18 percent of the total issued and outstanding share capital of Takeaway.com N.V. after the issuance of the equity component to Delivery Hero, but prior to any issuance of shares required to (re)finance all or part of the aforementioned cash component of the Consideration. The Transaction is subject to approval of the general meeting of Takeaway.com N.V. and anticipated to be completed in the first half of 2019.

Delivery Hero CEO’s Statement

Niklas Östberg, CEO of Delivery Hero, commented: «This transaction delivers a great deal of benefits to the Company and makes us better positioned. We will not only achieve but even exceed our revenue targets for 2019, notwithstanding the deconsolidation of the German business. At the same time we will hold a stake in Takeaway.com and have a significantly better cash position – the latter allowing us to reinvest at attractive returns. We are very excited by the huge opportunity that is growing in front of us, and my sincere thanks go to our German teams for creating such outstanding businesses.»

Takeaway.com CEO’s Statement

Jitse Groen, CEO and founder of Takeaway.com, commented: «Today’s transaction provides Takeaway.com with a stronger proposition for both consumers and partner restaurants in the German market. It also allows Takeaway.com to operate on a significantly larger scale which is essential in building a profitable online food delivery business. Although the transaction almost doubles Takeaway.com’s orders in Germany, there is still ample growth ahead, given that penetration of online food delivery in Germany is amongst the lowest in Europe. We look forward to welcoming Delivery Hero as a shareholder.»

Strategic Rationale

• Clear benefits for both Delivery Hero and Takeaway.com, as well as for all other stakeholders, including customers, partner restaurants, employees and shareholders
• Enables Delivery Hero to strengthen its global footprint, increase its focus on key growth regions and reinforce Delivery Hero‘s leadership positions
  • The year-on-year orders growth would increase from 46 percent pre-transaction to 50 percent post-transaction for the 9 months ending September 30, 2018
  • The year-on-year merchandise value (GMV) growth would increase from 38 percent pre-transaction to 42 percent post-transaction for the 9 months ending September 30, 2018, with circa 80 percent of the GMV coming from Delivery Hero’s markets where it holds number one leadership positions
  • The year-on-year constant currency revenue growth would increase from 66 percent pre-transaction to 77 percent post-transaction for the 9 months ending September 30, 2018
• Becoming a shareholder in Takeaway.com N.V. will enable Delivery Hero to benefit further financially from any value creation that Takeaway.com may generate
• Increases available cash from circa EUR 500 million as of September 30, 2018 to circa EUR 1.0 billion

Transaction Highlights

Total Consideration of circa EUR 930 million, consisting of a combination of cash and shares in Takeaway.com N.V. to be issued to Delivery Hero. The consideration will be subject to customary adjustments

The share component of the Transaction comprises 9.5 million Takeaway.com N.V. shares which is equal to circa 18 percent of Takeaway.com N.V.‘s total issued and outstanding share capital (after issuance of the equity component to Delivery Hero, but prior to any issuance of shares required to (re)finance all or part of the cash component of the Consideration) and represents EUR 422 million[2] of the total Transaction value

Takeaway.com has secured EUR 680 million of committed bridge financing which more than covers for the remaining cash portion of the Transaction

Following completion of the Transaction, Delivery Hero will have the right to submit a binding nomination for the appointment of one independent member to Takeaway.com N.V.’s supervisory board. This right will expire until the date Delivery Hero holds less than 9.99 percent of the Company’s issued and outstanding share capital

As part of the Transaction documentation, the parties have agreed to a standstill period of four years following the completion of the Transaction during which Delivery Hero and its subsidiaries, with limited exceptions, shall, in particular, not directly or indirectly in any way effect or cause to effect any increase in its shareholding in Takeaway.com N.V. through any financial instruments or related derivative securities

As of 01 July 2019 (or any earlier date on which an equity transaction to (re)finance the cash portion of the Transaction is completed), Delivery Hero and its subsidiaries may sell, transfer and otherwise dispose of any Takeaway.com N.V. financial instruments held by it, provided that such disposal is not made to certain restricted parties active in the online food delivery industry

During the standstill period and up to three years after that period, certain voting restrictions, mainly on mergers and acquisitions related matters and in case of conflict of interest, will apply to Delivery Hero’s shares in Takeaway.com N.V.

Certain other shareholder restrictions will apply to Delivery Hero during, and for a limited period after, the standstill period

Delivery Hero Germany Operations

Active in the German market since 2010, Delivery Hero Germany currently operates through three businesses: marketplaces Lieferheld and Pizza.de, and delivery business foodora

For the nine months ending September 2018, Delivery Hero’s German business recorded 23 million orders, Gross Merchandise Value («GMV») of EUR 462 million and revenues of EUR 76 million, which represents an increase of 13 percent, 16 percent and 16 percent respectively from the previous year

Upgrade to Investment Plan + Guidance

The increase in cash position allows Delivery Hero to allocate more capital towards investment opportunities across its segments at attractive returns thereby expanding leadership positions and growth

As a result, Delivery Hero is announcing an upgrade to its investment plan, with an aim to increase investments with a net adjusted Ebitda impact of negative EUR 250 million over the course of 2019. Delivery Hero expects to generate incremental revenues of EUR 45 million in 2019 and EUR 81 million of incremental recurring revenue per year starting in 2020

Following this, Delivery Hero expects to achieve revenues between EUR 1,080 million and EUR 1,150 million for 2019 in line with expectations prior to the Transaction (notwithstanding the deconsolidation of Germany) and adjusted Ebitda between negative EUR 270 and EUR 320 million after the additional investments

The company expects Europe to reach breakeven during the second half of 2019 and MENA to generate EUR 70 million of adjusted Ebitda in 2019 after the additional investments

Next Steps, Conditions and Advisors

The Transaction is subject to approval of the general meeting of Takeaway.com N.V.. The Extraordinary General Meeting («EGM») is expected to take place on 5 March 2019. It is noted that in light of the Transaction, each of Takeaway.com N.V.’s members of the management board have issued an irrevocable undertaking to vote, in their capacity of (indirect) shareholder, in favour of the approval of the Transaction in the EGM.

In connection with this Transaction, Morgan Stanley is acting as exclusive financial advisor to Delivery Hero, and Stibbe N.V. and Sullivan + Cromwell LLP are acting as legal advisors.

The Transaction is anticipated to be completed by the first half of 2019, provided the Resolutions have been adopted by the EGM. To confirm the commitment of Takeaway.com to the Transaction and timeline, it has agreed to a break fee in the amount of EUR 9.3 million, which will become due and payable if specific conditions relating to the Resolutions have not been met on or before 01 June 2019.

[1] Based on EUR 44.40 per share equivalent to the last 10 day VWAP as of December 19, 2018
[2] Based on EUR 44.40 per share equivalent to the last 10 day VWAP as of December 19, 2018