Uber Technologies' (UBER) planned Delivery Hero purchase could expand its delivery business, deliver more than $1.2 billion in yearly savings, improve margins after closing and lift earnings, though regulatory approval remains the main risk, UBS said in a note emailed Friday.
UBS said Uber has a strong chance of gaining control of Delivery Hero because Prosus plans to sell its stake and Delivery Hero's board supports the offer.
The firm said the deal could increase Uber's user base by about 25% and gross bookings by about 22%, strengthening its position against DoorDash (DASH) and other delivery platforms.
Uber's $1.2 billion annual savings target appears achievable and may be conservative, helped by combining platforms, removing repeated costs and selling more services to existing customers, while Delivery Hero's Talabat business, planned asset sales and further cost cuts should help Uber recover margins quickly after the deal closes, the firm said.
The transaction could add to adjusted earnings per share after its expected closing in H2 2027 and raise adjusted earnings before interest, taxes, depreciation, and amortization by a high-single-digit percentage by the third year, according to the note.
UBS kept Uber's buy rating and $110 price target.
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