Delivery Hero settles EU antitrust case, shares dip 5% on €329 mln fine

Delivery Hero shares fell over 5% after the company settled with the European Commission, incurring a €329 million fine to resolve an antitrust investigation initiated in June 2022 regarding agreements with Glovo. The fine, nearly 20% lower than the initially provisioned €400 million, reflects the Commission's acknowledgement of reduced intensity in the investigated issues during specific periods. Delivery Hero will release the remaining €71 million provision, which will be reflected in the company’s management without impacting its Adjusted EBITDA.

Analysis

Delivery Hero (ETR:DHER) shares declined by over 5% following the confirmation of a €329 million settlement with the European Commission, concluding an antitrust investigation initiated in June 2022. This investigation pertained to potential anticompetitive agreements with Glovo concerning geographic market allocation, exchange of sensitive commercial information, and no-poach agreements within the European Economic Area prior to Delivery Hero's acquisition of Glovo. Notably, the fine is nearly 20% lower than the €400 million provision set aside by the company, a reduction attributed by Delivery Hero to the European Commission's acknowledgement of a lower intensity of the issues during certain periods. The company, which stated it fully cooperated with the investigation, will release the remaining €71 million provision. Crucially, this adjustment will be reflected in the company’s management accounts without impacting its Adjusted EBITDA for the period, suggesting the financial impact was largely anticipated and contained. The settlement allows Delivery Hero to address the Commission's concerns and move forward, removing a significant legal overhang.

Key Decisions for Investors

• Consider that the €329 million fine, while substantial, was nearly 20% below Delivery Hero's provision, resulting in a €71 million provision release and no impact on Adjusted EBITDA, which could be viewed as a partial mitigation of the negative news.
• Evaluate whether the greater than 5% share price decline presents a buying opportunity, given the removal of antitrust uncertainty and a fine lower than provisioned, or if it reflects lingering concerns about past conduct.
• Monitor Delivery Hero's operational performance and strategic execution now that this significant legal matter is resolved, allowing management to focus on core business activities without this distraction.