Will Doordash Buy Deliveroo?
Will Doordash Buy Deliveroo?
Deliveroo, a British online food delivery company, has been delighting people across the UK, Ireland, France, Italy, and many more countries since 2013.
Founded by Greg Orlowski and Will Shu, the business delivers takeout and groceries directly to its customers’ doors, offering everything from dishes from local restaurants and fast-food chains to products from major supermarkets.
The business has gone from strength to strength since it first launched 11 years ago and debuted on the London Stock Exchange in March 2021.
Worth an estimated £2.14 billion, the company has caught the attention of Doordash, a US food delivery company, who have expressed interest in buying Deliveroo in recent years.
So, what is the likelihood that Doordash will buy Deliveroo? Continue reading to learn more.
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Has Doordash Expressed an Interest in Deliveroo?
According to The Sunday Times, Doordash considered purchasing Deliveroo in 2022.
The American company has a market valuation of $46.47 billion, but negotiations broke down due to the two companies disagreeing on the British company’s valuation.
Both Deliveroo and Doordash have remained tight-lipped about the talks. However, news of a potential purchase caused shares in Deliveroo to jump by 6%, resulting in shares in Doordash falling by 1.25%.
Is Doordash Likely to Buy Deliveroo?
Talks might have ended abruptly in 2022, but it doesn’t mean the purchase is off the cards.
An analyst at Jeffries, a global full-service investment banking and capital markets firm, said, “In this instance, the talks have failed. But such is the strength of the financial, industrial, and strategic logic of a Deliveroo takeover, we would not be surprised to see similar headlines re-emerge in the short term.”
If Doordash takes the time to “understand the sensibilities of the founder CEO, Will Shu,” they could potentially present a lucrative offer to buy Deliveroo.
It appears a buyout might still be possible, too, as Tony XU, CEO of Doordash, recently stated in a Financial Times interview that the company was hoping to diversify outside of its core US market.
Why Would the Founders Sell Deliveroo to Doordash?
Deliveroo and many other food delivery companies flourished during COVID-19, as people turned to takeout during lockdowns when restaurants were closed or they feared entering supermarkets.
However, once the lockdowns were lifted and many people’s anxiety eased, the demand for food delivery services plummeted, affecting Deliveroo’s bottom line.
For this reason, many investors have decided to invest in more profitable ventures due to a rise in interest rates, which has taken a toll on Deliveroo’s shares.
With profits declining and investment slow, Doordash could be a lucrative option for Will Shu and Greg Orlowski.
If Doordash could convince Shu, who is the majority shareholder to sell, the UK-based company could change ownership in the future.
However, it could face stiff competition from Amazon, which has a 13.2% stake in the business, and many believe it could be a potential buyer.