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Roula Khalaf, Editor of the Financial Times, curates her favorite stories in a weekly newsletter titled “The Editor’s Digest.”
DoorDash has agreed to acquire the food delivery company Deliveroo for £2.9 billion, effectively ending Deliveroo’s challenging period on the public markets. The San Francisco-based company plans to pay 180p per share for the UK-based delivery service, which has faced difficulties since its London listing four years ago.
Deliveroo, which operates in nine countries, has contended with fierce competition from companies like Uber Eats and reported its first full-year profit this March. The food delivery sector is seeing increasing consolidation as firms aim to grow by expanding their scale. Earlier this year, Prosus, a European investment arm of the South African group Naspers, reached a €4.1 billion agreement to take Europe’s largest food delivery service, Just Eat Takeaway, private.
On Tuesday, the boards of Deliveroo and DoorDash confirmed the final terms of their cash deal. DoorDash, which primarily operates in the US, Canada, Australia, and New Zealand, does not overlap with Deliveroo’s business, which was founded by CEO Will Shu in 2013. This lack of overlap is seen as an advantage in avoiding challenges from competition regulators.
DoorDash has been expanding internationally, notably through a €7 billion all-stock agreement for the Finnish delivery app Wolt in 2021. The company now operates in over 30 countries. Deliveroo’s acquisition by DoorDash marks the end of its turbulent period as a publicly-listed UK company, with shares failing to recover after a steep fall following its 2021 IPO.
Will Shu described the deal as the “beginning of a transformative new chapter” for Deliveroo, noting that DoorDash is much larger based on market capitalization. He remarked that the combined group would have the scale to invest in products, technology, and customer value. Tony Xu, CEO and co-founder of DoorDash, stated that the merger would integrate DoorDash’s operational strengths with Deliveroo’s local expertise.
Both companies are expanding into grocery and other retail delivery sectors and are enhancing their advertising businesses to increase profitability. Analyst Sean Kealy from Panmure Liberum noted that DoorDash’s plan to invest more in Deliveroo indicates an effort to boost competitiveness and accelerate growth.
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