The deal follows a fresh offer last month from San Francisco-based DoorDash for London-listed Deliveroo in a move set to create a combined firm with a presence across 40 countries and handling about $90bn (£67.7bn) of orders each year.
Deliveroo’s co-founder Will Shu said DoorDash and Deliveroo were “like-minded” with a shared strategic vision and aligned values.
The takeover will help DoorDash grow its market share in Europe, competing against Just Eat and Uber Eats, as it adds Deliveroo’s largest market, Britain and Ireland, to its roster, along with others.
The takeover will help DoorDash grow its market share in Europe, competing against Just Eat and Uber Eats (Photo: Nathan Stirk/Getty)Deliveroo, which was founded in 2013, operates in nine countries and works with more than 130,000 riders across the world, made sales of around £2bn last year.
Any final deal will be subject to regulators and shareholders approval. Analysts say that the bid could be subject to a counterbid and that Amazon is “the most likely counterbidder”. Amazon is already a major shareholder in Deliveroo.
App consolidation
Food delivery companies, many of which have struggled to make profits in a sector with very tight profit margins, are being pushed to combine after rapid acceleration during the pandemic saw them run out of steam after restrictions later came of.
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“Arguably, there were too many companies chasing the same opportunity and that’s unsustainable. We’re now in the phase where only the strongest will survive and they’re the ones picking up smaller rivals who realise their future is best part of a bigger entity, not going it alone.”
DoorDash reported a profit of $193m from a loss of $23m the year before. It operates in over 30 countries and delivers more than 2.5 billion orders a year, helping it notch up revenues of $10.7bn (£8bn) in 2024.
“We’ll cover more than 40 countries with a combined population of more than one billion people, enabling us to provide more local businesses with the tools and technology they need to thrive.”
Both companies have said it is too early to say what the takeover will mean for the Deliveroo brand, whose distinctive bike couriers are very recognisable in many city and town centres. No decision has been made whether or not its name will be kept when it merges with DoorDash.
DoorDash has 23,700 employees, and more than a million riders who deliver food in the countries it operates in. It has already said it will abide by the voluntary partnership agreement between Deliveroo and the GMB union which acts for riders, and has no plans to make any material changes to contracts with riders.
Better tech and price rises
The pandemic closed tens of thousands of restaurants and takeaways. Deliveries threw a lifeline to hundreds of them to help keep them afloat and even offered the promise of expansion to others.
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Deliveroo promises a “wealth of choice” for consumers, providing fast, reliable delivery of restaurant food, groceries and retail products. Continued direct delivery for restaurants enables them to serve customers beyond their immediate geographical location, tapping into broader markets, reaching customers unable to visit in person.
Also on the debit side, restaurants can also find themselves more dependent than ever for their survival on the delivery firm apps to generate revenue. That reliance could see themselves squeezed even more by the delivery firms for access to customers
Fiercely competitive market
In the US where competition between the big two delivery firms – DoorDash and UberEats – is already heating up, Uber is suing DoorDash in court accusing it of “bullying” restaurants into working exclusively with them by threatening to issue penalties or demote restaurants in the DoorDash app.
DoorDash also announced plans to buy restaurant booking platform SevenRooms for $1.2bn, as part of a push to tighten its grip on the food delivery and restaurant services market.
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