A Deliveroo rider near Victoria station in London, England, on March 31, 2021.
Dan Kitwood | Getty Images
LONDON — British food delivery firm Deliveroo on Tuesday said it has agreed to a takeover offer from American rival DoorDash that values the company at £2.9 billion ($3.9 billion).
Deliveroo, which lets users order hot meals and groceries via an app, said its board agreed to an offer from DoorDash to acquire all issued and to be issued shares in the company for 180 pence a share.
That marks a 44% premium to Deliveroo’s closing price on April 4, the last business day prior to DoorDash’s initial offer letter. Deliveroo shares jumped to a three-year high last week after the company confirmed it had received a takeover offer from DoorDash.
The transaction values Deliveroo at £2.9 billion on a fully diluted basis, the company said. Shares of Deliveroo climbed nearly 2% on Monday following news of the deal.
DoorDash said that the financial terms of the acquisition were final and would not be increased unless a third party steps in with a rival bid.
“I could not be more excited by the prospect of what DoorDash and Deliveroo will be able to accomplish together. We’ll cover more than 40 countries with a combined population of more than 1 billion people, enabling us to provide more local businesses with the tools and technology they need to thrive,” said Tony Xu, CEO and Co-founder of DoorDash.
International expansion
The acquisition deal marks an end to Deliveroo’s tumultuous ride as a public company.
Once viewed as a British tech darling, Deliveroo saw its shares tank 30% in 2021 in one of the worst trading debuts on the London Stock Exchange. Shares have continued to fall from that point and are down more than 50% from the firm’s £3.90 IPO price.
Deliveroo went public at a time when the U.K. was still feeling the impacts of Covid-19 lockdowns, which had boosted the fortunes of various food delivery platforms. Investors questioned the sustainability of that growth in a post-Covid world, and saw intense competition in the market and legal challenges to the gig economy model as key risks for Deliveroo.
For DoorDash, acquiring Deliveroo marks a renewed effort from the American online takeout app to expand its presence overseas. DoorDash acquired Finnish food delivery app Wolt for 7 billion euros ($7.9 billion) in 2022.
Shares of DoorDash dipped about 1% in U.S. pre-market trading.
More broadly, the food delivery sector has been undergoing consolidation for several years now. Earlier this year, Deliveroo sold parts of its Hong Kong unit to Delivery Hero, while Just East agreed to be acquired by investment group Prosus.