(Bloomberg/Yazhou Sun) — Deliveroo Plc shares surged by more than 18% on Monday, the most since 2021, after the British delivery firm disclosed an acquisition offer from DoorDash Inc.
On Friday, Deliveroo said in a filing that it had received a cash offer from DoorDash at £1.80 per Deliveroo share. That would value the company at about $3.6 billion, according to calculations by Bloomberg.
In the filing, Deliveroo said it would be “minded to recommend such an offer” to shareholders at those terms.
Shares were trading at 171.30 pence in London at 8:15 a.m. on Monday, giving the company a market value of around £2.5 billion ($3.3 billion). Deliveroo shares have risen about 19% this year.
Europe’s food delivery companies expanded rapidly during the pandemic but were punished when economies reopened and demand for takeout orders dropped. Since then, London-based Deliveroo and its rivals have focused on cutting costs, exiting weak markets and reining in expansions.
With a Deliveroo acquisition, DoorDash, which already owns Finnish delivery provider Wolt, would triple its business outside of the US “with no geographic overlap” or antitrust risk, Clément Genelot, an analyst at Bryan Garnier, wrote in a note on Monday. He said there’s a low likelihood of competing bids.
Amazon.com Inc. is currently the largest shareholder in Deliveroo, with a 14% stake. Yet Amazon is unlikely to offer a counter bid for Deliveroo because the sector is not a “current priority” for the e-commerce giant, Genelot wrote.
An Amazon representative declined to comment.
Deliveroo said on Monday it was suspending a £100 million buyback program announced in March due to the DoorDash bid.
If the acquisition closes, it would mark the second major food delivery deal this year after Prosus NV agreed to buy Just Eat Takeaway for €4.1 billion.
–With assistance from Henry Ren.
(Updates with analyst context on Amazon and DoorDash in 6th paragraph onwards)
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