WSJ : Big Apple Takes Bite Out of Food Delivery

Big Apple Takes Bite Out of Food Delivery
New bills passed in New York City could curb some appeal of companies like Grubhub, DoorDash and Uber Eats

The New York City Council has long had a bone to pick with food delivery platform Grubhub. During the pandemic, that animus seems to extend to reach the sector more broadly as market share has leveled. Home to about 10% of the U.S. market, and a possible harbinger of local measures elsewhere, the city’s attitude matters a great deal.

The conflict heated up last week. On Thursday, the council said it passed five bills meant to shift some of the balance of power away from food delivery platforms toward “struggling mom and pop shops.” The bills include some straightforward legislation like providing a restaurants’ direct telephone number to eaters and prohibiting platforms from charging restaurants for phone orders that don’t result in transactions.

But they also include more controversial and likely more consequential rules. One, if put into effect as anticipated, would extend temporary caps placed on the commissions food-delivery platforms can charge restaurants at least until mid-February, 2022. Beyond what was decided last week, the city council says it is also scheduled to review a permanent commission cap bill this month.


Long-term caps sound ominous for food delivery companies, but the true extent of their effects isn’t fully known. U.S. market leader DoorDash, DASH +0.11% for example, has reported profits on the basis of adjusted earnings before interest, tax, depreciation and amortization for the last four quarters—pretty much the entirety of the pandemic.

At the same time, the company said in an April blog post that commission caps have caused a “tangible impact” to its business in terms of lessening demand as prices paid by customers have risen to recoup lost dollars.

Food delivery companies don’t typically break out their economics by city, but a spokesperson for Uber Eats did say it had lost more than $60 million in New York City alone due to pandemic-related commission caps. For food delivery companies, consumers’ price sensitivity is likely to increase post-pandemic as they gain access to in-person dining and rely less on delivery.

There are also other threats. The council also voted to require delivery services to share monthly eater information with restaurants if restaurants request it. While it remains unclear as to exactly what data this rule will cover, a summary of the bill suggests it could include eaters’ names, phone numbers, email addresses, home addresses and what is ordered.


That would arm restaurants with information they could use to determine where their orders are coming from, helping them to assess delivery platforms’ individual worth. It could also significantly lower switching costs between platforms and help enable restaurants to better access customers themselves.

While a lot has been said of commission caps in food delivery, deciding who has access to eaters’ data is no less controversial. Food-delivery platforms have argued such a law would put eaters’ personal information at risk, noting consumers should be able to opt-in to data sharing rather than opt-out. Others have described third-party delivery as a “gatekeeper” of data with one source likening platforms to a “diner cartel” that is finally being busted.

New York’s move is of particular importance to Grubhub since the city is its largest U.S. market. As of June, Bloomberg Second Measure data show Grubhub and DoorDash were tied with the market share lead in New York City with 35% a piece to Uber Eats’ 29%. Elsewhere, temporary caps have been put into place across many cities and suburbs nationwide. In June, San Francisco became the first city in the U.S. to pass a permanent fee cap.

New York looms large for food delivery. If you can’t make it there, can you make it anywhere?

FT : Deutsche Wohnen investor says higher offer by Vonovia still ‘not fair’

Deutsche Wohnen investor says higher offer by Vonovia still ‘not fair’
German €18bn real estate merger faces shareholder opposition despite improved price

One of the largest shareholders in German landlord Deutsche Wohnen has hit out over a sweetened offer from rival Vonovia, saying its €18bn bid continues to undervalue the company.

Vonovia announced late on Sunday that it plans to make a revised bid for Deutsche Wohnen at €53 a share, 2 per cent higher than its initial all-cash offer of €52 per share which was rejected last month.

But Michael Muders, a fund manager at Union Investment, Germany’s third-largest asset manager, told the Financial Times on Monday that the improved offer was still “not fair” because it does not reflect true asset value.

Vonovia’s first approach collapsed late last month after it narrowly missed the required threshold of shareholder support. A hostile bid by Vonovia was rejected in 2016.

The revised offer is again subject to a minimum acceptance rate of 50 per cent of Deutsche Wohnen investors. But Vonovia has in recent days increased its stake to just under 30 per cent, meaning it needs to sway another 20 per cent of shareholders.

Deutsche Wohnen has backed the proposed deal, which would create a group that owns 500,000 flats in Germany as well as property in Sweden and Austria worth almost €90bn. Both companies say that the transaction will generate annual cost savings of €105m.

Muders said that the higher offer still did not fully reflect the fundamental value of Deutsche Wohnen’s property assets, did not include a control premium and that cost savings would not be shared with Deutsche Wohnen shareholders.

Union holds a 2.5 per cent stake in Deutsche Wohnen, making it one of the landlord’s largest shareholders. Last month, it rejected Vonovia’s first bid.

Both Deutsche Wohnen and Vonovia rejected the criticism, pointing to the fact that the sweetened offer implies a premium of 17 per cent on the target’s undisturbed share price.

Deutsche Wohnen added that conversations with shareholders showed that the overarching majority of investors support the takeover.

Muders argues that the book value of Deutsche Wohnen’s property is outdated because it does not reflect a landmark court decision in April that struck down a highly contentious rent cap imposed by Berlin’s local government.

By the end of March this year, Deutsche Wohnen reported that its net asset value stood at €52.50 per share. But Muders insisted that the value of Berlin-based property had increased as a result of the court ruling.

He said he estimated a net asset value of roughly €56 per share. “We are very uncertain if the shareholder’s interests still have the highest priority for Deutsche Wohnen’s management,” he added.

Deutsche Wohnen said that it would publish updated estimates on the net asset value on August 13, alongside its half-year results.

“The offer price of €53 per share is slightly above the expected net tangible assets,” it said, stressing that the previous calculations were already based on the assumption that the rent cap was unconstitutional and would be outlawed. The court decision, therefore, “does not call for a change in the valuation assumptions or Deutsche Wohnen’s outlook”, it added.

Rolf Buch, Vonovia chief executive, told the Financial Times that “the first bid did not fail because of the price”.

Shares in Vonovia were up 1.2 per cent by midday trading on Monday, while those of Deutsche Wohnen were flat at just below €53.

Vonovia is expecting the go-ahead from Germany’s financial watchdog BaFin for a revised bid by the end of this week.

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • TGTX -2.9%, RACE -0.8%

Other news:

  • AMTX -7.9% (files for $300 mln mixed securities shelf offering)
  • SQ -4.6% (to acquire Afterpay; also reported earnings)
  • VXX -1.6% (falling with strength in US futures)
  • PH -1.5% (announces recommended all cash acquisition of Meggitt)
  • SLCA -1.3% (files mixed securities shelf offering)

Analyst comments:

  • BY -0.6% (downgraded to Equal-Weight from Overweight at Stephens)

FT : Axa says half of French restaurateurs ready to accept Covid settlement

Axa says half of French restaurateurs ready to accept Covid settlement
Insurance group doubles underlying earnings to €3.6bn in first half of 2021

French insurer Axa said half of its restaurateur clients in the country had either accepted a settlement for pandemic losses or had expressed interest in doing so, as it seeks to move on from a bruising dispute with the hospitality industry.

The insurer offered compensation to 15,000 restaurant owners in June at a total cost of €300m, or 15 per cent of the turnover of the restaurant industry during the period when business was disrupted by Covid-19. 

Thomas Buberl, Axa’s chief executive, told the Financial Times that he believed the company was making “very good progress” in the discussions.

“I’m confident we’ll reach an agreement with the large majority of them [restaurateurs] by the time the transaction expires,” he said. Restaurateurs have until September 30 to accept the offer. 

Hospitality groups have been embroiled in a bitter stand-off with their insurers over whether their business interruption policies should have paid out due to forced closures during pandemic lockdowns.

Burberl revealed the progress as the group delivered underlying earnings of €3.6bn in the first half of the year. That was double the amount in the same period in 2020, when the group suffered substantial Covid-related losses, and 11 per cent ahead of analysts’ consensus estimates.

The company’s shares rose 4 per cent to €22.70 by late morning on Monday.

Axa, the second-largest European insurer, is embroiled in about 1,500 separate court cases with restaurateurs in France that are “going in all kinds of directions”, Buberl said. The group has also faced legal challenges in Germany, Switzerland and the UK.

“We want to focus on life after Covid and make sure that we look forward and not backwards,” Buberl said, though he stressed the company’s position that “when it is a decision of the French state to close all restaurants, it is not our responsibility”.

He added: “If you have one restaurant that is having difficulties, we can always help. If all of a sudden, all of the restaurants are in difficulty, then the insurance mechanism doesn’t work any more.” 

Axa’s results were bolstered by a strong underwriting performance at its Axa XL division, which benefited from an upswing in commercial insurance prices.

In the period, the expected cost to the group of the French settlement offer was offset by the lower frequency of motor insurance claims, an industry-wide trend during the pandemic. “We have put [the pandemic] behind us, and we are looking forward now,” said Buberl. 

On the disputed business-interruption policies, Buberl conceded that “some of the contracts were not phrased in a crystal clear way”, and stressed that the company had now undertaken to clarify all contracts internationally “that had any risk of being misinterpreted”.

After the ransomware attack that hit Axa’s Asian operations earlier this year, Buberl said the insurer had not had to pay any compensation to affected customers. “The situation is well under control,” he added.

Axa also announced on Monday that its board had proposed to extend Buberl’s tenure for another four years, subject to a shareholder vote next April.

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • ARCB +4.6%, TSEM +4.5%, UUUU +2.9%, GPN +1.3%

Other news:

  • XCUR +36.3% (Exicure and Ipsen enter collaboration targeting rare neurodegenerative disorders)
  • BPTS +22.7% (reports top line results of SARA-INT Phase 2 study)
  • LPG +5.8% (increases dividend to $1.00/sh from $0; also updated operating outlook)
  • XPEV +4.4% (July deliveries)
  • LI +4% (July deliveries)
  • EDU +3.7% (bouncing from last week's weakness)
  • FOLD +2.3% (announces that the European Commission has approved Galafold)
  • ABCM +2% (to acquire BioVision for $340 mln)
  • TAL +2% (bouncing from last week's weakness)
  • ALKS +1.3% (FDA granted Fast Track designation to nemvaleukin alfa (nemvaleukin) for the treatment of mucosal melanoma)
  • MSCI +0.7% (entered into a definitive agreement to acquire Real Capital Analytics for $950 mln in cash)

Analyst comments:

  • BLMN +3.9% (upgraded to Buy from Hold at Deutsche Bank)
  • FSLR +3.2% (upgraded to Positive from Neutral at Susquehanna)
  • GSKY +2.7% (upgraded to Equal-Weight from Underweight at Stephens)
  • AB +1.5% (upgraded to Buy from Neutral at Citigroup)
  • AVTR +1.5% (upgraded to Overweight from Neutral at Piper Sandler)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • XCUR +43%, BPTS +17.7%, PROG +7.1%, LPG +6.6%, XPEV +4.4%, LI +4.2%, EDU +3.2%, RIDE +2.4%, ABCM +1.5%, TAL +1.3%, IWM +1%, HSBC +0.7%, SPY +0.5%, QQQ +0.5%
  • Gapping down:
    • AMTX -5.9%, SQ -4.2%, VXX -2.1%, PH -1.6%, SLCA -1.3%, SLM -0.5%