DoorDash Inc. has offered to buy UK-based Deliveroo Plc for US$3.6 billion ($4.74 billion), marking a renewed attempt by the US company to expand into more overseas markets by buying smaller food delivery providers.
Deliveroo said DoorDash has proposed a cash offer for Deliveroo's shares at 1.80 (US$2.40 or $3.16) apiece, according to a filing with the London stock exchange. Based on Deliveroo's shares outstanding, the offer may value the company at about US$3.6 billion, according to calculations by Bloomberg. Deliveroo said it would be "minded to recommend such an offer" to shareholders, should a firm bid be made at those terms.
DoorDash, which owns two-thirds of the restaurant delivery market in the US, has been looking to strengthen its position abroad. For DoorDash, acquiring Deliveroo would help it access the UK and urban areas in Europe.
Deliveroo said it has engaged in discussions with DoorDash regarding the offer, but there is "no certainty" a deal will ultimately come together. The companies have engaged in takeover talks in the past. DoorDash has until May 23 to make a firm offer under UK rules and would still need to convince regulators that it has no overlap with Deliveroo in terms of their operating markets.
DoorDash shares gained about 1% to US$188.97 at 2.58pm in New York. Since Deliveroo went public in London in March 2021, its shares have slid 62%. The company had a valuation of US$2.9 billion at Friday's close.
Europe's food delivery companies in particular expanded rapidly during the pandemic and were subsequently punished when economies reopened and demand for takeout orders sharply declined. Since then, London-based Deliveroo and its rivals have focused on cutting costs, exiting weak markets and reining in expansions.
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The proposal is the latest example of consolidation in the food delivery industry, after Prosus NV in February agreed to buy Amsterdam's Just Eat Takeaway.com NV.
In March, shares of Deliveroo tanked after projecting earnings that fell far bellow analysts' estimates. Earlier that month, the company exited the Hong Kong market, following disappointing sales and mounting competition.
San Francisco-based DoorDash operates in more than 30 countries including the US, continental Europe, Japan and Australia. The bulk of the overseas markets are in more sparsely populated European countries like Sweden, Estonia, Denmark and Iceland, which it entered through its purchase of Finnish food-delivery company Wolt Enterprises three years ago.
