DoorDash, a US company, has acquired Deliveroo from the UK in a cash-only deal worth PS2.9 billion.
Deliveroo has been volatile on the London Stock Exchange ever since it was listed in 2021. The 180p offer per share marks the end to this turbulent tenure.
Deliveroo’s board of directors approved the offer. It represents a premium over recent trading levels, but the company is valued at less than half its IPO value.
Deliveroo shares soared after the announcement and were trading at 1.8% more at 10:50am London time.
DoorDash, with headquarters in San Francisco said that the acquisition aligned with their strategy of globalization and wouldn’t trigger any competition concerns due to the lack of overlap of the geographic markets of the two companies.
Deliveroo leaves the London stock market following a turbulent listing
Deliveroo, founded in 2013 by Will Shu & Greg Orlowski once represented the potential for high growth of UK technology.
The market launch of Uber Eats in March 2021, however, was marred with falling share prices and weak investor interest, as well as mounting competition from competitors such As Just Eat Takeaway and Uber Eats.
Deliveroo, despite turning its first profit this year, has been struggling to maintain momentum. This led to speculations about a possible takeover.
DoorDash is present in more than 30 countries including Australia, Canada, New Zealand, the US and Canada.
Shu will earn PS172.4million from this transaction. He still owns 6.4% of the company.
The agreement was described by him as “the start of a new transformative chapter” and he added that the two companies have a shared strategic vision for scaling operations to increase customer value.
Analysts: deal will support the competitiveness of its markets
The deal is expected to be completed without any regulatory obstacles, as Deliveroo does not have DoorDash in its core markets.
Sean Kealy of Panmure Liberum said that Doordash’s intent to invest more in Deliveroo showed the intention behind this deal to “support competition in its markets”.
He said: “[It is] clear evidence that DoorDash wants to acquire the company in order to increase its growth.”
The Jefferies analyst said that DoorDash’s initial offer was due to be fulfilled by DoorDash on May 23, and the final recommendation came in “well before” the deadline. “This suggests the engagement has been much more substantial than initially signalled.”
This transaction is part of a consolidation trend in the industry, as exemplified earlier this year by Prosus’s EUR4.1bn acquisition of Just Eat Takeaway.
Tony Xu CEO of DoorDash said that the merger will combine Deliveroo’s local market expertise and the operational expertise of the American group.
Recently, both companies expanded their services to include grocery delivery as well as advertising. These areas are seen by many analysts and investors as essential for long-term profit.
Why is the sector consolidating?
DoorDash and Deliveroo’s tie-up marks the latest consolidation move in the food delivery industry as firms grapple with a cooling market.
Prosus – the European arm of South Africa’s Naspers – agreed earlier this year to an EUR 4,1 billion deal for Just Eat Takeaway – Europe’s largest food delivery service – to be taken private.
This transaction was a major shift for the food industry and highlighted the increasing pressures on the public market.
FreshGoGo is a New York-based Asian meal and grocery delivery service. GrubMarket acquired it for $3.6 billion. It was backed by Tiger Global, BlackRock and other heavyweights.
This acquisition is part of GrubMarket’s larger consolidation strategy, which aims to expand its reach within the consumer-facing sector.
Uber’s regional presence was also boosted by its agreement to purchase Delivery Hero Foodpanda in Taiwan, last year.
The deal fell through in 2025 when the Fair Trade Commission of Taiwan blocked it.
It cited concerns about competition, noting that an Uber acquisition could have resulted in a market share of nearly 90% for Taiwan’s food-delivery sector. This would increase the likelihood of price increases.
The boom of takeaway food orders, fueled by pandemics, is fading.
Delivery startups exploded between 2020-2021. Many of them built advanced platforms that connected restaurants, drivers and customers.
They aggressively compete for market shares through discounts and promotions.
By 2022 however, changing consumer behavior and wider economic pressures such as rising inflation and slowing employment began to undermine growth.
Investors became cautious when food delivery started to look like a low margin utility rather than a tech company with high growth.
Companies were forced to reduce their operations or merge to remain competitive as discretionary spending decreased and more consumers began to dine out.
This has led to a consolidation of the players in certain geographies, especially those that overlap.
This trend is highlighted by the DoorDash purchase of Deliveroo — it’s a response to muted expectations for growth and an attempt to prove that scale and greater market access can lead long-term profits through increased operational efficiency.
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