Delivery Hero to use Talabat IPO proceeds to repay US$1B convertible debt

MENA – German food delivery service Delivery Hero has announced it is utilizing proceeds from Talabat’s IPO to settle around €1 billion (US$1.04 billion) of convertible debt.

Delivery Hero has been actively issuing convertible bonds in recent years, alongside completing several tenders, new issues, and separate transactions.

Its latest tender targets the remaining 2025 and 2026 bonds, along with a portion of its 2027 bonds.

After this tender, Delivery Hero will still have significant equity-linked exposure with €750 million (US$810 million) due in January 2028, €500 million (US$540 million) due in March 2029, and €1 billion (US$1.08 billion) due in February 2030.

These figures are relative to the company’s market capitalization of €9 billion (US$9.72 billion). Despite this, the European convertible bond market continues to shrink due to lower new supply.

The company is focusing on repurchasing the full remaining €48.1 million (US$51.9 million) of its 0.875% 2025 bonds, €593.5 million (US$641.38 million) of its 1% 2026 bonds, and up to €350 million (US$378 million) in cash for the €875 million (US$945 million) 1% 2027 bonds.

Bondholders are offered 99.375% of principal for the 2025 bonds and 97.5% for the 2026 bonds. The 2027 bonds will be priced via a modified Dutch auction with a minimum price of 94.5%, with accrued interest also paid.

The company announced its decision to repurchase bonds on Thursday. Prior to this, the 2025 bonds were indicated at 98.4%, the 2026 bonds at 96.1%, and the 2027 bonds at 92.15%, based on LSEG data.

Delivery Hero used proceeds from the sale of its Taiwanese foodpanda business in May to repurchase bonds, following a previous tender in March for 2025 and 2026 bonds.

These convertible bonds are significantly out of the money. For example, the 2027 bonds have a conversion price of €98 (US$105.84), while the shares were trading at around €31.80 (US$34.30) in the afternoon.

The 2026 bonds have a delta of 1% with a conversion price of €183.12 (US$197.77), according to LSEG data.

The latest bond repurchase will be financed with proceeds from the AED7.45 billion (US$2.03 billion) secondary IPO of Talabat in November.

This announcement follows stronger-than-expected growth for the fourth quarter, supported by solid order growth and increasing basket size.

Gross merchandise value (GMV) rose 8.2% to €12.81 billion (US$13.37 billion) in the quarter, exceeding analysts’ forecasts of €12.31 billion (US$13.28 billion).

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