Deliveroo Shares Surge After DoorDash’s $3.6 Billion Takeover Proposal
Shares of Deliveroo, the London-based food delivery platform, have reached their highest point in three years following a substantial takeover proposal from DoorDash valued at $3.6 billion. The announcement came after the European markets closed on Friday, sparking significant interest on the London Stock Exchange.
Details of the Proposed Takeover
In a press release issued on Friday, Deliveroo’s board communicated to DoorDash that it would recommend the proposed bid to its shareholders, contingent upon the submission of a firm offer reflecting the indicated financial terms. Furthermore, Deliveroo has initiated talks with DoorDash and has granted the company access to its due diligence processes.
Significantly, the announcement prompted Deliveroo to suspend a previously announced share buyback program worth $133.5 million, indicating a shift in focus towards the potential acquisition.
Deadline for the Offer
DoorDash has until May 23 to decide whether to present a firm acquisition offer. This timeline establishes a critical period for both companies as they navigate the complexities of the potential deal.
Competitive Landscape in Food Delivery
The proposed acquisition follows a recent agreement by the investment firm Prosus to acquire Just Eat Takeaway.com for €4.1 billion (approximately $4.29 billion), expanding its food delivery footprint in Europe. Both DoorDash and Prosus are looking to strengthen their market positions amid a competitive environment.
Currently, DoorDash’s operations extend across the U.S., Canada, Australia, and New Zealand, while Deliveroo has made strides in various markets including the U.K., Italy, and France. Deliveroo achieved its first annual profit last year, marking a significant milestone for the company, founded in 2013.
Insights on DoorDash’s Interests
Market analysts such as Ronald Josey from Citi Investment Research have highlighted several factors that might make Deliveroo an attractive target for DoorDash. According to Josey, “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.”
Market Reaction
In light of these developments, Deliveroo’s stock experienced a notable increase of over 17% on Monday, reflecting investor optimism surrounding the potential merger.
As the situation evolves, stakeholders await further updates, particularly concerning DoorDash’s decision by the set deadline.