Deliveroo shares jump on report of DoorDash's interest in takeover

By Louis Goss

Deliveroo shares jumped on Wednesday on news the London-listed food delivery firm held talks with DoorDash in regards to the San Francisco company's interest in a possible takeover.

Doordash approached Deliveroo about a possible takeover last month, before negotiations between the two companies reached a stalemate due to disagreements over valuations, Reuters reported, citing two sources.

Talks between the two companies have now ended and there are no ongoing negotiations between the rival food delivery firms, the report said. Deliveroo declined to comment. Doordash was approached by MarketWatch for comment.

Doordash's approach comes as food delivery companies have suffered from a slowdown in business since COVID-19, as customers have turned away from take-out and returned to sit-in restaurants.

Low valuations on the London Stock Exchange have also driven a wave of interest in British companies from U.S. businesses seeking to grow through bargain-priced acquisitions.

Deliveroo (UK:ROO) shares, listed on the London Stock Exchange, increased 3% on Wednesday, having advanced 23% over the past 12 months, while also having lost 54% of their value since the company's initial public offering in March 2021.

Doordash (DASH) shares were down marginally in Wednesday's pre-market session, having gained 52% over the previous 12 months while having lost 36% of their value since the company floated in New York in December 2020.

Deliveroo was founded in 2013 by Connecticut-born entrepreneur Will Shu and his childhood friend Greg Orlowski, who had been working as a software developer.

Shu, who came up with the idea for Deliveroo while working as an investment banker in Morgan Stanley's London office, left his job in Canary Wharf to become the food delivery company's first rider in a position he worked in for over a year.

Doordash was started by a group of Stanford University students in 2012 using seed funding from startup accelerator Y Combinator before growing into America's biggest food delivery service ahead of Grubhub and UberEats.

In November 2021, Doordash acquired Finnish food delivery firm Wolt for $8.1 billion, having previously acquired upmarket food delivery firm Caviar for $410 million in 2019.

-Louis Goss

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06-26-24 0445ET

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