Shares of Deliveroo, the food delivery service based in London, are hitting three-year highs on Monday after it received a $3.6 billion proposed takeover offer from DoorDash.
Deliveroo announced the bid after markets closed in Europe on Friday. On Monday, the company also said that it was suspending a $133.5 million share buyback it had announced last month.
Deliveroo said Friday that its board has informed DoorDash that if a firm offer is made at the financial terms provided, it will recommend the bid to its shareholders.
Deliveroo added that its board has decided to engage in talks with DoorDash about the possible offer and has given the company access to due diligence.
Deliveroo said DoorDash must decide by May 23 whether it plans to make a firm buyout offer or not.
The proposed deal comes a few months after technology investment company Prosus agreed to buy food delivery giant Just Eat Takeaway.com for 4.1 billion euros ($4.29 billion). Acquiring Just Eat Takeaway.com will boost Prosus’ food delivery portfolio in Europe, a move that DoorDash is also looking to make.
DoorDash currently runs its business in the U.S., Canada, New Zealand and Australia.
Deliveroo, which was founded in 2013, operates in 10 markets worldwide, including the U.K., Italy and France. The company reported its first annual profit last year.
In January 2024 Delivery Hero sold its minority stake in Deliveroo after holding it for less than three years. The two companies worked together earlier this year, with Delivery Hero buying some of Deliveroo’s Hong Kong assets after the company decided to exit that market.
Ronald Josey of Citi Investment Research can see a few reasons why DoorDash is interested in Deliveroo.
“While we continue to believe that DoorDash is more focused on organic expansion, Deliveroo meets several of DoorDash’s merger and acquisition criteria, including expanding geographies and total addressable market whereby it would take DoorDash time to do organically while delivering long-term free cash flow,” he wrote.
Shares of Deliveroo jumped more than 17% on the London Stock Exchange on Monday.
—Michelle Chapman, AP business writer
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