LONDON, England — Deliveroo, the popular British food delivery service, has announced it will be acquired by American competitor DoorDash in a deal valued at approximately £2.9 billion ($3.9 billion). This agreement comes as Deliveroo’s board accepted a proposal from DoorDash to purchase its outstanding shares at a price of 180 pence each, representing a significant 44% premium compared to its closing price on April 4, just before DoorDash’s initial offer.
The announcement sparked a surge in Deliveroo’s stock, propelling it to its highest point in three years. The acquisition is viewed as a pivotal moment for Deliveroo, a company that has faced a rocky public journey since its London Stock Exchange debut in 2021. Following an initial performance that saw shares plummet 30%, the company has struggled to regain investor confidence, currently trading lower than its initial public offering price of £3.90.
DoorDash’s CEO and Co-founder, Tony Xu, expressed enthusiasm about the merger, suggesting the combined resources of both companies could fuel expansion across more than 40 countries, serving over 1 billion people. Xu highlighted the potential for enhanced support to local businesses through improved tools and technology.
The acquisition signals a strategic move for DoorDash, which has sought to increase its footprint beyond the U.S. market. This approach follows the firm’s earlier $7.9 billion acquisition of Finnish food delivery platform Wolt in 2022. With this latest acquisition, DoorDash aims to strengthen its international presence amid fierce competition in the food delivery sector.
Deliveroo’s challenges are reflective of broader industry trends, where growth during the pandemic has increasingly been questioned as a long-term reality. As traditional consumer habits shift back to pre-pandemic norms, market analysts have raised concerns about the sustainability of heightened demand for food delivery services.
The competitive landscape continues to evolve, with other players such as Just Eat facing acquisition pressures. Just Eat’s recent agreement with investment group Prosus further underscores ongoing consolidation in the industry, as companies strive to adapt to new market conditions.
Deliveroo’s decision to accept this takeover deal ends a chapter marked by volatility and uncertainty, as the company navigated investor skepticism regarding its business model and the viability of its growth in a post-pandemic environment. The move also reflects a more extensive trend of consolidation in the food delivery market, shaped by economic pressures and changing consumer habits.
With the deal, both Deliveroo and DoorDash are poised to usher in a new era that could significantly reshape the future of food delivery worldwide.