Deliveroo's Stock Surge After DoorDash Takeover Bid
Shares of British food delivery firm Deliveroo experienced a surge, reaching their highest level in over three years on Monday, following the confirmation of a $3.6 billion takeover offer from U.S. firm DoorDash. The initial announcement was made after European markets closed on Friday, with a follow-up update on Monday stating the immediate suspension of the £100 million ($133.5 million) share buyback program announced on March 18. At 11:18 a.m. U.K. time on Monday, Deliveroo shares were up 17.6% to 172.4 pence, the highest since January 2022.
Last week's update revealed that Deliveroo's board received a cash offer from DoorDash on April 5 of 180 pence per Deliveroo share, valuing the company at approximately $3.6 billion, according to a CNBC calculation of LSEG data. In a Friday statement, Deliveroo's board indicated that it had considered the proposal with advisers and would be "minded to recommend" it to shareholders if a firm offer were made, subject to other terms. Discussions with DoorDash are ongoing.
Deliveroo shares declined sharply in 2022 after the company's London IPO the previous year, due to investor concerns about growth in the food delivery market post-Covid-19, intense industry competition, and questions regarding worker rights within its gig economy model. Since then, the company's stock has seen steady gains, though remaining far from its peak of 386.1 pence per share in August 2021. Deliveroo operates in markets including the U.K., France, Italy, Belgium, Ireland, Singapore, and Qatar. Its European regional competitors include Germany's Delivery Hero, Uber Eats, and Just Eat. Notably, Delivery Hero sold its stake in Deliveroo in early 2024.
In March, Deliveroo reported its first-ever annual profit, swinging from a £10.9 million pre-tax loss in 2023 to a £12.2 million profit in 2024. DoorDash, on the other hand, posted an annual net income attributable to shareholders of $123 million in full-year 2024. DoorDash primarily operates in the United States and Canada, with some presence in Australia and New Zealand. The food delivery industry is characterized by takeovers of regional businesses, with DoorDash acquiring Finland's Wolt in 2021, and Deliveroo recently selling parts of its Hong Kong business to Delivery Hero earlier this year. Just Eat is also set to be acquired by investment group Prosus.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented that a Deliveroo sale at the current offer of 180 pence per share would mean the company
