British takeaway! Deliveroo agrees to £2.9bn deal from US rival DoorDash
US food delivery giant DoorDash has reached an agreement to acquire Deliveroo in a deal valuing its London-listed rival at £2.9billion.
The Silicon Valley-based group, which the largest food delivery platform in the US, said it would pay 180p per share in cash for Deliveroo.
This proposal represents a 29 per cent premium to the London-listed group's closing share price on the day before the offer period started and a 44 per cent premium prior to sending its initial offer letter to Deliveroo.
DoorDash said the takeover will expand its geographic presence to an additional nine markets, such as the UK, meaning it will have operations in over 40 countries.
The tie-up will also provide the 'opportunity to allocate resources more effectively to strengthen competitive advantage', according to the group.
DoorDash was founded in late 2012 - originally as Palo Alto Delivery - by Stanford University students Tony Xu, Stanley Tang, Andy Fang and Evan Moore.
Deliveroo was started the following year by US national Will Shu and Greg Orlowski after Shu became dismayed about the lack of late-night food delivery options in London.
Should the deal go through, the former investment banker is reportedly set to earn a £172million payout, based on his 6.4 per cent stake in the business.
Shu said: 'We are now at the beginning of a transformative new chapter. DoorDash and Deliveroo are like-minded organisations with a shared strategic vision and aligned values.
'Together, we will be even better positioned to serve consumers, merchants, riders and local communities.
The enlarged group will have the scale to invest in product, technology and the overall consumer value proposition.'
Deliveroo shares rose 2.2 per cent to 175.9p on Tuesday morning, far below their initial public offering price of 390p.
The group's 2021 IPO saw Deliveroo shed more than a quarter of its value on its first day of trading amid concerns about the firm's huge losses, dual-class structure and treatment of workers.
Since then, it has contended with a massive slowdown in trade as loosening Covid-related curbs and cost-of-living pressures dampened demand for takeaways.
This led to the firm slashing jobs and marketing spending, and exiting some territories, including the Netherlands and Australia.
Deliveroo eventually recorded its first annual profit last year as international sales recovered and inflationary pressures eased.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Deliveroo's takeover 'could turn the UK market into a fierce two-horse race with DoorDash and Uber at the top'.
He added: 'With no competing bid in sight, this looks like a bold, calculated move to outpace global rivals and gain ground fast.'
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