Major Shakeup: Deliveroo Accepts £2.9 Billion Takeover Offer from DoorDash

The recent announcement of DoorDash's £2.9 billion takeover offer for Deliveroo marks a significant development in the competitive landscape of the food delivery industry. This acquisition, valued at 180p per share, provides a 44% premium over Deliveroo's closing price on April 4th, highlighting DoorDash's strategic intent to consolidate its market position . The merger will create a combined entity operating in over 40 countries and handling approximately $90 billion in orders annually, reflecting the increasing globalization of food delivery services. San Francisco-based DoorDash said it would pay 180p a share in cash for the UK group, which has struggled since it listed in London four years ago. Deliveroo, which operates a food delivery app in nine countries, has faced stiff competition from rivals including Uber Eats and reported its first full year profit in March. Consolidation is gathering pace in the food delivery sector as companies bet that increasing size will help them grow. Earlier this year, Prosus — the European investment arm of South African group Naspers — struck a €4.1bn deal to take Europe’s biggest food delivery group Just Eat Takeaway private.

DoorDash said it would abide by the voluntary partnership agreement between Deliveroo and the GMB union, and does not plan to make any material changes to contracts with riders.

Tony Xu, the chief executive and co-founder of DoorDash, said he had “long admired” Deliveroo’s team. “Like DoorDash, Deliveroo is obsessively focused on their customers – consumers, merchants and riders,” he added.

One of Deliveroo's first backers, Danny Rimer of Index Ventures, previously told the BBC that if he had his time again he would have voted for a US listing.

News of a potential agreement between the firms emerged just over a week ago, and sent Deliveroo's share price up sharply.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said DoorDash was aiming to "squeeze out" rivals such as Just Eat and "rattle Uber" in the UK.

"The deal, expected to close later this year, could turn the UK market into a fierce two-horse race with DoorDash and Uber at the top," he added.

Despite the potential benefits of enhanced operational efficiencies and expanded market reach, this acquisition is not without its challenges. Anticipated job cuts of about 1-3% among administrative staff raise concerns regarding workforce stability within Deliveroo . Nevertheless, DoorDash has committed to retaining Deliveroo's London headquarters, which may help mitigate some negative impacts on employee morale and local operations.

As consumer habits continue to evolve in response to technological advancements and changing lifestyles, such consolidations are indicative of broader trends within the industry . The forthcoming completion of this acquisition in late 2025 will undoubtedly reshape competitive dynamics while underscoring the importance of adaptability for companies operating within this rapidly growing sector.

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Sarah H

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