DoorDash has agreed to buy UK-based food-delivery platform Deliveroo for an equity value of about £2.9 billion (€3.4 billion), as the US company pushes into more overseas markets.
DoorDash has offered £1.80 in cash for each Deliveroo share, the company said in a statement on Tuesday, confirming the terms of an offer announced on April 25th. That’s a 29 per cent premium to Deliveroo’s closing share price on April 24.
The deal is subject to regulatory and shareholder approval.
DoorDash, which controls two-thirds of the restaurant delivery market in the US, will expand its reach to more than 40 countries with the acquisition, it said. The two companies combined had a gross order value of about $90 billion last year and have a combined 50 million monthly active users.
Deliveroo shares closed at £172.10 on Friday in trading in London, where markets were closed on Monday. The stock is up 21 per cent this year. DoorDash’s shares also advanced, closing at $205.40 on Monday, taking gains for the year to 22 per cent.
DoorDash said that its offer is final and won’t be increased unless another bidder comes in for the UK company.
Previous negotiations had ended in disagreement over Deliveroo’s valuation, Reuters reported last year. DoorDash, which provides a restaurant delivery service through a mobile application, said it would not increase its offer, but reserved a right to do so if a third party emerged with a competing offer for Deliveroo.
The acquisition will help Doordash grow its market share in Europe, competing against Just Eat and Uber Eats. Britain and Ireland are Deliveroo’s largest market, accounting for 62% of the value of its orders in its latest quarter.
Deliveroo’s directors, including chief executive officer Will Shu, have agreed to offer their shares in the deal, and DoorDash said it has agreements from investors representing 15.4 per cent of the stock so far. The deal needs the approval of owners representing 75 per cent of Deliveroo’s shares.
The proposal is the latest example of consolidation in the industry, after Prosus in February agreed to buy Amsterdam’s Just Eat Takeaway.
Food delivery companies are being pushed to combine after rapid acceleration during the Covid-19 pandemic lost steam in the years following. A new generation of global players with deep pockets are now competing for customers across borders.
Deliveroo shares dropped in March after projecting earnings that fell far below analysts’ estimates, and the company exited the Hong Kong market, following disappointing sales and mounting competition. - Reporting: Bloomberg/Reuters
