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Shares of the British food delivery company Deliveroo surged to their highest levels in over three years on Monday, following the announcement of a $3.6 billion takeover bid from the U.S.-based firm DoorDash.
Deliveroo made the news public after European markets closed on Friday. In a subsequent update on Monday, the company revealed it was suspending its previously announced £100 million ($133.5 million) share buyback program.
On Monday, Deliveroo’s shares experienced a rise of 17.6%, reaching 172.4 pence, marking their highest point since January 2022 by 11:18 a.m. U.K. time.
Last week, it was disclosed that Deliveroo’s board received a cash proposal from DoorDash on April 5, valuing the company at approximately $3.6 billion, based on a price of 180 pence per share, as calculated using LSEG data by CNBC.
In a statement issued on Friday, Deliveroo’s board indicated that it had reviewed the offer with its advisers and expressed a conditional willingness to recommend it to shareholders if a formal offer was forthcoming, pending further negotiations with DoorDash.
Deliveroo’s stock took a significant hit in 2022 after its public listing in London the previous year, primarily due to investor concerns regarding growth within the food delivery sector in a post-Covid-19 environment, increased competition, and unresolved issues surrounding worker rights in its gig economy setup. Despite a gradual recovery since then, the company’s stock remains well below its peak of 386.1 pence per share reached in August 2021.
Deliveroo operates across various markets, including the U.K., France, Italy, Belgium, Ireland, Singapore, and Qatar, facing regional competition from companies such as Germany’s Delivery Hero, which divested its Deliveroo stake in early 2024, along with Uber Eats and Just Eat.
In March, Deliveroo reported its inaugural annual profit, bouncing back from a pre-tax loss of £10.9 million in 2023 to a profit of £12.2 million in 2024.
DoorDash, on the other hand, reported a net income attributable to shareholders of $123 million for the full year 2024. The company mainly services markets in the United States and Canada, with some operations in Australia and New Zealand.
The food delivery landscape is characterized by numerous acquisitions of local enterprises, such as DoorDash’s purchase of Finland’s Wolt in 2021, and Deliveroo’s recent sale of parts of its Hong Kong operations to Delivery Hero earlier this year. Moreover, Just Eat is reportedly set to be acquired by the investment group Prosus.
‘Floperoo’
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted in a Monday report that a sale of Deliveroo at the current offer price of 180 pence per share would reinforce its reputation as ‘Floperoo,’ a label it has struggled with since its problematic IPO debut in 2021.
“Despite finally achieving profitability, the company continues to grapple with challenges surrounding its share price,” she stated. “Deliveroo’s expansion into grocery deliveries has contributed positively, yet it remains in a highly competitive landscape.”
Streeter added that the deal could be “unpalatable” for the U.K. government, which aims to increase the number of technology firms listing on London’s stock exchange, and is indicative of a broader trend of exits.
However, analysts at Citi expressed that they did not anticipate significant regulatory obstacles impeding a DoorDash takeover of Deliveroo, attributing this to the absence of operational overlap between the two companies’ markets.
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