Uber Technologies Inc (NYSE:UBER, ETR:UT8) could see its profits surge by US$150 million per year following its acquisition of Foodpanda Taiwan, analysts believe.
Deutsche Bank welcomed the delivery group’s latest deal, which saw it purchase Foodpanda's Taiwan business for US$950 million as well as a 3% stake in Delivery Hero (ETR:DHER, OTCQX:DLVHF) for US$300 million.
After accounting for synergies, the German bank reckons the acquisition will push Uber’s underlying earnings higher by US$150 million.
Analysts were in favour of the deal largely due to the attractiveness of the Taiwanese market, which they say sees users on average order seven deliveries per month.
Additionally, Taiwan has a “delivery membership penetration rate that is the highest of Uber's markets.”
Deutsche Bank also said it was impressed by the US group’s continued execution of its merger and acquisition strategy, which attempts to drive scale and profitability for its overall delivery business.
Foodpanda is Delivery Hero’s lead brand for food and grocery deliveries in Asia, with headquarters in Singapore and operations in 11 different countries.
Uber’s stakebuilding in the German food delivery group represented a 32% premium to Tuesday’s closing price.
Shares in Delivery Hero surged as much as 26% following the announcement.
Deutsche Bank rates Uber a ‘buy’ and targets a US$95 share price, representing a 46 premium to its current market value.