Today’s News
U.S. meal delivery giant DoorDash has expressed interest in acquiring U.K.-based Deliveroo, according to sources familiar with the matter.
Image Source: Bloomberg
The approach was made last month, but disagreements over valuation led to the termination of discussions, with no ongoing talks at present. Both DoorDash and Deliveroo declined to comment on the matter.
Deliveroo’s market value has declined significantly, with shares down 68% since their peak in August 2021, closing recently at 127.5 pence. This values the company at approximately 2.1 billion pounds (USD 2.66 billion). Conversely, DoorDash shares dropped 2% following the news but later regained some of those losses, ending the day up 1.7%.
The broader online food delivery market has seen a downturn in demand post-pandemic, further pressured by investor preference for more profitable enterprises amid rising interest rates. Deliveroo, which listed in March 2021, partners with 180,000 restaurants and operates with 140,000 riders.
Image Source: Sky News
Image Source: Bloomberg
Image Source: Reuters
Significant stakeholders in Deliveroo include Amazon, holding a 13.23% share, followed by DST Global and Deliveroo’s CEO Will Shu. Shu, who founded Deliveroo in 2013 with Greg Orlowski, initially held a dominant voting power which has since diminished with the conversion of his shares from Class B to Class A post-IPO.
Previously, in 2022, DoorDash considered purchasing Deliveroo. January this year, DoorDash CEO Tony Xu highlighted the company’s strategy to diversify beyond its core U.S. market in a Financial Times interview.
DoorDash acquired Finnish competitor Wolt for USD 8 billion in 2021 in an all-share deal.
Meanwhile, other players in the market like Germany’s Delivery Hero are divesting from non-profitable markets, underscoring the industry’s shift towards more sustainable operations. Despite these challenges, Deliveroo reported a slight increase in orders in its first quarter, driven by strong performances in France, the UAE, and Hong Kong, with a 6% rise in gross transaction value to 1.83 billion pounds (USD 2.32 billion).
(USD 1 = 0.7883 pounds)
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