Nomura: Meituan's acquisition of DingDong's mainland business estimated premium reaches 58%, rating "Neutral"

Nomura published a research report indicating that yesterday (the 5th), Meituan-W (03690.HK) announced that it has signed a final agreement with DingDong (DDL.US) to acquire all of its operations in China. DingDong is a regional fast delivery platform primarily focused on the East China region and specializes in fresh grocery categories. After the transaction is completed, DDL will only retain its overseas business, which the firm believes constitutes a very small portion of its current overall performance. Nomura maintains a "Neutral" rating on Meituan with a target price of 107 yuan.

According to the announcement, DDL has the right to extract up to $280 million in cash from the acquired assets, provided that the remaining net cash balance of the acquired assets must be above $150 million. According to the firm's calculations, as of the end of the third quarter of 2025, DDL has $420 million in net cash. Therefore, the seller can ultimately extract up to $270 million in cash from the acquired assets before selling the assets to Meituan. As of the 4th of this month, DDL's latest market value was $725 million. If the $270 million cash extracted by the seller is deducted, the market value of the assets acquired by Meituan is $455 million. Thus, the $717 million consideration paid by Meituan implies a premium of 58%.

Nomura believes that Meituan's agreement to pay such a high premium may be due to bidding from JD (JD.US) and the strategic value of the assets