Shares in British rapid delivery platform Deliveroo jumped 17% this morning as investors reacted to the news of a $3.6bn (£2.7bn) takeover offer from DoorDash, the biggest food delivery app in the US.
After the UK stock market closed on Friday, Deliveroo issued a statement in response to recent press speculation. It confirmed it had received a takeover proposal from DoorDash on 5 April worth 180p per share, which it was considering accepting. Deliveroo shares hit about 172p in early trading today, their highest level since 2022.
The statement from Deliveroo said: “Having carefully considered the Possible Offer with its advisers, the Board of Deliveroo has indicated to DoorDash that, should a firm offer be made on the financial terms set out above, it would be minded to recommend such an offer to Deliveroo shareholders, subject to the agreement of the other terms of the offer.”
Deliveroo’s board is in discussions with DoorDash about the possible offer and has provided the US firm with access to due diligence.
However, the company noted there could be “no certainty that any firm offer for Deliveroo will be made”.
Under City takeover rules, DoorDash has until 5pm on 23 May to provide Deliveroo with a firm offer.
A takeover deal could net Will Shu, who founded Deliveroo in 2013, around £172m, based on his 5.9% stake in the business.
After a surge in demand for its services during the pandemic, the company listed in London in 2021 at 390p per share. This dropped by about a quarter on the first day of trading and has since struggled to regain its previous highs after years of loss-making. However, Deliveroo recorded its first annual profit in 2024 of £2.9m on revenue of £2.1bn.
Last month, Shu stated that he expects grocery shopping to eventually overtake takeaway food orders on the platform.
The company launched its grocery business in 2018 and has since amassed a broad selection of retail partners, including Morrisons, Co-op, Sainsbury’s, Waitrose, Whole Foods, Nisa, and SPAR. The company’s grocery business reached 16% of gross transaction value (GTV) and saw strong double-digit growth in 2024.
The takeover talks between Deliveroo and DoorDash come as consolidation gathers pace in the sector. Earlier this year, Prosus struck a €4.1bn deal to take Europe’s leading food delivery group Just Eat Takeaway private.
DoorDash operates in the US, Canada, Australia and New Zealand and does not overlap with any of Deliveroo’s markets, which means the deal is unlikely to get blocked by competition regulators.
NAM Implications:
- Background inevitability.
- Consolidation is the way forward in online or any other means of order fulfilment…
- …quick or otherwise
- As night follows day.
- Best to factor this takeover into your trade strategies…
