US food delivery giant DoorDash has acquired British rival Deliveroo in a £2.9bn ($3.9bn) deal, ending the UK business’ rocky tenure as a public company.
The all-cash offer, priced at £1.80 ($2.40) per share, represents a 77% premium over Deliveroo’s recent trading price. However, the acquisition price is less than half its 2021 IPO valuation of £7.6bn.
Deliveroo’s board unanimously backed the deal. CEO and co-founder Will Shu, who owns 6.4% of the company, is set to pocket £172mn.
The merger will expand DoorDash’s footprint in Europe, where it has lagged behind competitors like Uber Eats and Just Eat. Deliveroo’s largest markets are the UK and Ireland, which account for around 60% of its total orders. In Europe, the company also has a presence in France, Belgium, and Italy.
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Tony Xu, CEO and co-founder of DoorDash, said the acquisition would bring together two teams that have “similar visions and values.”
“Deliveroo is just such a team and one that I have long admired,” he said. “[Together] we’ll cover more than 40 countries with a combined population of more than 1 billion people, enabling us to provide more local businesses with the tools and technology they need to thrive.”
Founded in London in 2013 by Shu and Greg Orlowski, Deliveroo quickly grew from a local startup into an international player. It pioneered “dark kitchens” with its Deliveroo Editions model and introduced a subscription service, Deliveroo Plus, in 2017.
The company raised a total of £1.2bn over several rounds. The largest was a £432mn ($575mn) round in 2019 led by Amazon. Two years later, Deliveroo listed on the London Stock Exchange at the height of the COVID pandemic delivery boom.
However, Deliveroo’s shares fell 14% on debut, and the company struggled to meet investor expectations. By 2022, it exited markets like Australia, the Netherlands, and Germany to refocus on core operations.
Still, 2024 marked a turnaround, with Deliveroo posting its first annual pre-tax profit of £12mn ($16mn). Despite that progress, DoorDash’s bid proved compelling.
“I want to thank all of our incredibly skilled people, dedicated riders and merchants and our loyal consumers for helping us to build the successful business we have today,” Shu said. “I hope they share our excitement about what the future holds.”
Up to 830 jobs could be cut post-acquisition, mostly in back-office roles, though both firms pledged to minimise redundancies.
Deliveroo will retain its London HQ and existing GMB union agreements. DoorDash said the combined company will invest in tech and logistics to better compete globally.
For Deliveroo, it’s the end of independence. For DoorDash, it’s a bold bet on Europe’s fragmented but still-growing food delivery market.