Food delivery service Deliveroo surges following $3.6B proposed takeover offer from DoorDash

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Food delivery service Deliveroo surges following .6B proposed takeover offer from DoorDash — Food delivery service Deliveroo surges following 36B proposed takeover offer.jpeg

Shares of Deliveroo, the London-based food delivery service, are soaring to three-year highs following a $3.6 billion takeover offer from DoorDash. The proposed bid was announced by Deliveroo after European markets closed on Friday, prompting the company to suspend a $133.5 million share buyback that was previously announced.

Deliveroo’s board has indicated that if DoorDash presents a firm offer at the specified financial terms, they will recommend the bid to shareholders. The company has also agreed to engage in discussions with DoorDash regarding the potential acquisition, granting access to due diligence. DoorDash is required to make a decision by May 23 on whether to proceed with a formal buyout offer.

This proposed deal comes shortly after Prosus, a technology investment company, agreed to acquire food delivery giant Just Eat Takeaway.com for 4.1 billion euros ($4.29 billion). The acquisition of Just Eat Takeaway.com will enhance Prosus’ food delivery presence in Europe, a move that DoorDash is also seeking to make.

Currently, DoorDash operates in the U.S., Canada, New Zealand, and Australia, while Deliveroo serves 10 markets globally, including the U.K., Italy, and France. Deliveroo achieved its first annual profit last year, marking a significant milestone for the company.

In January 2024, Delivery Hero divested its minority stake in Deliveroo after a brief ownership period. The two companies collaborated earlier this year, with Delivery Hero acquiring some of Deliveroo’s assets in Hong Kong following the latter’s decision to exit that market.

Analysts like Ronald Josey of Citi Investment Research see strategic value in DoorDash’s interest in Deliveroo. Josey noted that Deliveroo aligns with DoorDash’s merger and acquisition criteria by expanding into new geographies and addressing a larger market opportunity that would take time to achieve organically.

Following the announcement of the proposed takeover, shares of Deliveroo surged more than 17% on the London Stock Exchange, reflecting investor optimism about the potential deal. As discussions progress between Deliveroo and DoorDash, market observers will be closely monitoring developments in this high-profile acquisition bid.