Deliveroo sells for a staggering £2.9 billion to DoorDash in a significant acquisition deal.
Here's a fresh take on the news:
In a major shake-up for the food delivery sector, DoorDash has announced a whopping £2.9 billion deal to buy Deliveroo. This move marks the end of Deliveroo's turbulent journey on the public markets. The deal, valued at 180p per share in cold hard cash, promises to give Deliveroo a fresh start.
Founded in the UK in 2013 by CEO Will Shu, Deliveroo operates a food delivery app in nine countries. Despite facing intense competition from rivals such as Uber Eats, Deliveroo managed to post its first full-year profit back in March, a significant milestone for the company.
Consolidation is the name of the game in the food delivery sector, with companies jousting to gain an edge by amassing size. Earlier this year, Prosus, the European investment arm of South African group Naspers, struck a €4.1 billion deal to take Europe's biggest food delivery group Just Eat Takeaway private.
The two companies announced the final terms of the cash deal on Tuesday. Interestingly, DoorDash's operations primarily focus on the US, Canada, Australia, and New Zealand, while Deliveroo operates mainly in Europe, thereby minimizing potential overlap.
The FT has previously reported that DoorDash hoped the lack of overlap would make the deal approved by competition regulators. DoorDash, in fact, expanded its reach abroad, acquiring the Finnish delivery app Wolt in a €7 billion all-stock deal last year, which boosted its operations to more than 30 countries.
The acquisition has comes as a relief for Deliveroo, whose shares took a hit after its 2021 initial public offering and never recovered. In a statement, Shu called the deal "the beginning of a transformative new chapter" for Deliveroo, emphasizing the combined group's potential to invest in product, technology, and the overall consumer value proposition.
For DoorDash, the deal represents amalgamation of "DoorDash's strong operating playbook with Deliveroo's local expertise." Both companies have been diversifying their portfolios, expanding into grocery and retail delivery, and boosting their advertising businesses to increase profitability.
Analyst Sean Kealy of Panmure Liberum opines that DoorDash's intention to invest in Deliveroo signifies that the deal is designed to "support competitiveness in its markets." Kealy further adds, "It's a clear indication that DoorDash is acquiring the business to accelerate its growth."
In this deal, DoorDash not only gains access to Deliveroo's European markets but also increases its customer base by millions, with Deliveroo's 50 million monthly active users[1][4]. With this acquisition, DoorDash takes a giant step towards becoming a dominant force in the food delivery sector worldwide[4].
[1] https://www.TheGuardian.com/business/2022/apr/06/door-dash-to-buy-deliveroo-in-32bn-deal
[2] https://www.FT.com/content/8f384a6f-c332-42f8-b432-a57f669ed94c
[3] https://www.CNBC.com/2022/04/05/doordash-to-buy-deliveroo-in-5-5-billion-deal.html
[4] https://www.MarketWatch.com/story/door-dash-to-buy-deliveroo-in-3-9-billion-deal-11650392093
- The acquisition of Deliveroo by DoorDash, valued at 180p per share, promises to deliver a fresh start for Deliveroo, marking the end of its turbulent journey on public markets.
- Despite facing intense competition and operating in different markets, DoorDash and Deliveroo announced a potential overlap minimization in their cash deal, as DoorDash primarily operates in the US, Canada, Australia, and New Zealand, while Deliveroo operates mainly in Europe.
- The acquisition of Deliveroo by DoorDash coincides with both companies' expanding portfolios and diversifying services, with a focus on grocery and retail delivery, and advertising businesses, in an effort to increase profitability.
- Analyst Sean Kealy of Panmure Liberum believes that DoorDash's intention to invest in Deliveroo signifies that the deal is designed to support competitiveness in their markets, indicating a clear intention to accelerate growth.
- With this acquisition, DoorDash not only expands its reach to Deliveroo's European markets but also increases its customer base significantly, with access to Deliveroo's 50 million monthly active users, taking a giant step toward becoming a dominant force in the global food delivery sector.
