DoorDash to buy Deliveroo for $5 billion to take on competition
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Food delivery companies are being pushed to combine after rapid acceleration during the Covid-19 pandemic lost steam in the years following.
PHOTO: REUTERS
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Bengaluru – US meal delivery firm DoorDash will buy British rival Deliveroo for £2.9 billion (S$5 billion), the companies said on May 6, as they look to expand their reach and take on competition.
The companies rekindled talks in April after DoorDash approached Deliveroo with a 180 pence per share proposal, which was confirmed on May 6 as the final offer.
Previous negotiations had ended in disagreement over Deliveroo’s valuation, Reuters reported in 2024.
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 US$90 billion (S$116 billion) in 2024 and have a combined 50 million monthly active users.
The move is the latest example of consolidation in the industry, after Dutch technology investor Prosus in February agreed to buy Amsterdam’s Just Eat Takeaway.com. Prosus has investments in several food delivery platforms, including full ownership of iFood and a 28 per cent stake in Delivery Hero.
Food delivery companies are being pushed to combine after rapid acceleration during the Covid-19 pandemic lost steam in the years following. A new generation of global players with deep pockets is now competing for customers across borders.
DoorDash, which provides a restaurant delivery service through a mobile application, said it will not increase its offer, but reserved a right to do so if a third party emerged with a competing offer for Deliveroo.
Deliveroo has received undertakings of support from investors holding about 15.4 per cent of shares, it said, including from founder and chief executive Will Shu, Greenoaks and DST Global.
However, analysts from investment bank Panmure Liberum highlighted “the notable absence” of Deliveroo’s largest investor, Amazon, from this list, adding that they still see Amazon as the most likely counterbidder.
Amazon, which has a 14.4 per cent stake in Deliveroo, did not immediately respond to a Reuters request for comment.
The acquisition will help DoorDash grow its market share in Europe, competing against Just Eat and Uber Eats.
Britain and Ireland are Deliveroo’s largest market, accounting for 62 per cent of the value of its orders in its latest quarter.
Deliveroo’s other large markets include France and Italy, but the deal is not expected to face regulatory hurdles as DoorDash has virtually no presence in Deliveroo’s 10 markets, a source told Reuters in April.
Deliveroo shares dropped in March after projecting earnings that fell far below analysts’ estimates, and the company exited the Hong Kong market, following disappointing sales and mounting competition. REUTERS, BLOOMBERG
