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Deliveroo announced the bid after markets closed in Europe on
Friday. On Monday, the company also said that it was suspending
a $133.5 million share buyback it had announced last month.
Deliveroo said Friday that its board has informed DoorDash that
if a firm offer is made at the financial terms provided, it will
recommend the bid to its shareholders.
Deliveroo added that its board has decided to engage in talks
with DoorDash about the possible offer and has given the company
access to due diligence.
Deliveroo said DoorDash must decide by May 23 whether it plans
to make a firm buyout offer or not.
The proposed deal comes a few months after technology investment
company Prosus agreed to buy food delivery giant Just Eat
Takeaway.com for 4.1 billion euros ($4.29 billion). Acquiring
Just Eat Takeaway.com will boost Prosus’ food delivery portfolio
in Europe, a move that DoorDash is also looking to make.
DoorDash currently runs its business in the U.S., Canada, New
Zealand and Australia.
Deliveroo, which was founded in 2013, operates in 10 markets
worldwide, including the U.K., Italy and France. The company
reported its first annual profit last year.
In January 2024 Delivery Hero sold its minority stake in
Deliveroo after holding it for less than three years. The two
companies worked together earlier this year, with Delivery Hero
buying some of Deliveroo's Hong Kong assets after the company
decided to exit that market.
Ronald Josey of Citi Investment Research can see a few reasons
why DoorDash is interested in Deliveroo.
“While we continue to believe that DoorDash is more focused on
organic expansion, Deliveroo meets several of DoorDash's merger
and acquisition criteria, including expanding geographies and
total addressable market whereby it would take DoorDash time to
do organically while delivering long-term free cash flow,” he
wrote.
Shares of Deliveroo jumped more than 17% on the London Stock
Exchange on Monday.
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