Delivery Hero’s years of global expansion are now under scrutiny. One of the company’s biggest investors is pushing the food delivery giant to sell off assets and streamline its growing monopoly, arguing that the current strategy has destroyed billions in shareholder value.
Delivery Hero is facing growing pressure from one of its biggest shareholders to speed up a restructuring that could involve selling large parts of the business.
Hong Kong hedge fund Aspex Management, which owns about 9.2% of the German food supplier, warned in a letter that it could push for leadership changes if the company fails to move quickly on a strategic review. The investor argued that Delivery Hero’s weak profitability and global spread left the company negatively exposed.
Shares of the Berlin-based group have fallen nearly 30% in the past year and now trade below €17, valuing the company at around €5 billion. At the height of the pandemic-era tech boom in 2021, the stock traded above €130. That’s not a fix, that’s a crater.
Aspex wants management to accelerate a strategic review announced in December and consider selling businesses where it is not the strongest owner or operator, specifically targeting operations across Asia, the Middle East and Latin America.
Chief executive Niklas Östberg said the company is considering strategic options with JPMorgan advisers and that discussions are ongoing. Management maintains that the current share price does not reflect performance progress, which is exactly what you mean when the share price is highly reflective of performance progress.
The controversy comes as Delivery Hero faces external pressure. Competition from Uber, DoorDash, Grab and Meituan has grown in key markets, and the company is also facing a 329 million euro fine from the European Commission related to an investigation into the food delivery cart.
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The dispute reflects a wider reckoning taking place across the food delivery sector around the world.
For years the industry has pursued growth at almost any cost, rushing into new countries, subsidizing orders with discounts and spending heavily on shipping networks in the hope that scale will eventually produce profits. Investors endured those losses during a time of ultra-low interest rates and pandemic-driven demand for home delivery, because the story was good enough that no one needed the numbers to work yet.
That time is over. Rising interest rates and tight financial markets have forced investors to prioritize profits and monetization, and companies that have spent the past decade planting flags everywhere are now being asked to explain why.
Many of our competitors have already narrowed their geographic focus. Uber exited a few markets while doubling up in strong regions. DoorDash remains focused on North America while selectively expanding overseas. Delivery Hero went the other way, expanding to nearly 70 countries with brands including Talabat, Glovo and Foodpanda.
That global history once looked like a good idea. Today it looks like a lease with 70 different problems. Conducting operations in multiple locations brings legal exposure, regulatory risk and costs that add up faster than revenue. Aspex’s central argument is that the company’s structure has undermined profitability relative to its peers, and the stock chart makes it hard to disagree. A company that works everywhere can easily end up managing nowhere.
Strategic reviews are now a descriptive assessment of management.
A meaningful divestiture or a credible plan to focus on a company’s strongest markets can ease the pressure and give investors something to work with. But if the review continues without concrete action, the conflict with Aspex is likely to escalate into a full-blown management battle, with leadership changes back on the table and the company negotiating from a weakened position. Östberg has a road ahead of him. The question is whether you are quick enough to sit in the driver’s seat.
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