DoorDash Inc. reached an agreement to buy the UK-based food-delivery platform Deliveroo Plc for about £2.9 billion ($4.99 billion), as the US company pushes into more overseas markets.
DoorDash has offered 180 pence in cash for each Deliveroo share, the company said in a statement on Tuesday, confirming the terms of an offer announced on April 25. That’s a 29% premium to Deliveroo’s closing share price the day before. Deliveroo’s board has agreed to the terms, which 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 50 million monthly active users.
Deliveroo’s share price sank after its 2021 initial public offering, which priced the shares at 390 pence apiece. At its peak, the company was valued at more than £7 billion, but dropped dramatically after growth slowed when Covid-19 lockdowns ended. It attracted activist Sachem Head Capital Management, which took a stake in the British company because it was undervalued and a potential takeover target, Bloomberg News had reported.
Deliveroo’s shares rose 2.2% to 175.80 pence at 9:39 a.m. in London trading. DoorDash gained 31 cents to close at US$205.40 on Monday, taking gains for the year to 22%.
Deliveroo had struggled to meet analyst expectations this year. In March, its shares fell the most since 2022 after it projected weak earnings. That same month, it announced it would close its Hong Kong business, which was hurt by weak sales and mounting competition.
See also: CICT divests CapitaSpring’s serviced residence for $126 mil
DoorDash said that its offer is final and won’t be increased unless another bidder comes in for the UK company. Investors representing 15.4% of Deliveroo’s stock have agreed to sell their shares so far, including Chief Executive Officer Will Shu. The deal needs the approval of owners representing 75% of Deliveroo’s shares.
Deliveroo is also relatively debt free coming into the deal and has a positive net cash position. The enterprise value of the deal is £2.4 billion, DoorDash said.
The proposal is the latest example of consolidation in the industry, after Prosus NV in February agreed to buy Amsterdam’s Just Eat Takeaway.com NV. Food delivery companies are being pushed to combine after rapid acceleration during the coronavirus pandemic lost steam in the following years. A new generation of global players with deep pockets are now competing for customers across borders.
