Doodash Takes A Big Bite Of UK Delivery Market With $3.9B Deliveroo Buyout
Synopsis
DoorDash and Deliveroo will have a presence in over 40 countries and about 50 million monthly active users.
DoorDash (DASH) has agreed to acquire UK-based Deliveroo Plc for an equity value of 2.9 billion pounds ($3.85 billion) to strengthen its presence across the Atlantic.
The American food delivery company has offered 180 pence in cash for each Deliveroo share, according to a filing on the London Stock Exchange, where Deliveroo shares are listed.
That's a 4.6% premium to Deliveroo's closing share price on Monday and a 28.6% premium to the closing price on April 24, the day before DoorDash formally made the offer.
Shares of DoorDash were down 0.4% in extended trading as of late Monday. Premarket trading on U.S. exchanges begins at 4 am Eastern Time.
As part of the deal, which requires approval from regulators and shareholders, Deliveroo will be delisted and re-registered as a private company.
The move comes at a moment of weakness for Deliveroo, which generates the bulk of its revenue from the UK and France.
Deliveroo's stock has dropped by about 50% since its 2021 listing, as the surge in online food delivery demand faded post-pandemic and investors turned their focus to companies with stronger profitability.
In March, Deliveroo revealed plans to withdraw from Hong Kong and sell parts of its business to Delivery Hero's food panda.
Wells Fargo analysts said last month that they "see (the) deal as growth dilutive to the enterprise (DoorDash) and represents entry into some fiercely competitive, mature delivery markets."
According to the exchange filing, DoorDash and Deliveroo will have a presence in over 40 countries and about 50 million monthly active users.
In 2022, DoorDash acquired Finnish delivery platform Wolt in an all-stock $8.1-billion deal.
The latest deal comes months after South African investment firm Prosus NV agreed to buy Amsterdam's Just Eat Takeaway.com NV.
DoorDash will report quarterly earnings before markets open on Tuesday.
(1 pound sterling = $1.33)
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