Deliveroo agrees to Doordash's £2.9 billion acquisition

Food delivery app Deliveroo has agreed to be taken over by US giant Doordash to a business worth £2.9 billion.

The combined company will serve approximately 50 million customers per month in more than 40 countries.

The partnership is also expected to provide fierce competition for competitors while the Uber diet in the UK.

However, the deal is the latest example of a British public company taken over by a U.S. company, attracting further attention to UK investment.

Doordash offers 180p per delivery, marking a 44% increase in shares of the UK company's publicly negotiated last month.

However, it is well below the 390p stock price that Driveoo first launched on the London Stock Exchange in April 2021.

“The combination with Deliveroo will strengthen Doordash's position as the world's leading platform in local commerce,” the two companies said.

Will Shu, CEO and co-founder of Deliveroo, said he was “very proud of what we have achieved as an independent business”.

However, he said the deal with San Francisco-based Doordash was “transformative”.

“The expanded group will have the scale of investment products, technology and overall consumer value proposition.”

The acquisition must be submitted to shareholders for final approval. Mr Shu's shares will acquire approximately £172.4 million.

Deliveroo, co-founded by Mr. Shu in 2013, has 130,000 delivery drivers in nine countries. It provides food delivery services by connecting restaurants with customers through the app. It also offers groceries.

Its sales in 2024 were around £20 billion, while Doordash, founded the same year, made about £8 billion last year through its operations in more than 30 countries.

Both companies initially served as food delivery services, providing customers with convenient and fast access to a variety of restaurants and takeaways, but Doordash has grown into a larger business.

Doordash's value soared after its listing in the United States compared to Deliveroo listed in the United Kingdom.

The acquisition raises further questions about the London Stock Exchange, which lost another big name.

In addition to the acquisition, British listed companies have had hundreds of millions of pounds worth of British shares in the United States exiting the London Stock Exchange over the past few years, raising concerns about the UK's attractiveness to investment.

These include Cambridge-based Microchip Giant Arm Holdings (which now sells its shares in New York), Flutter and Equipment Hoile giant Ashtead, owner of Paddy Power.

Index Ventures' Danny Rimer previously told the BBC that he would vote for the U.S. listing if he had time again.

News of potential agreements between companies emerged a week ago and rose sharply.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Doordash’s goal is to “squeeze” out competitors in the UK, such as Just Eating and “Rattle Uber.”

He added: “The deal is expected to end later this year, which could turn the UK market into a fierce race for two horses, with Doordash and Uber being the highest on the top.”

“Without seeing competitive bids, it looks like a bold, calculated move that outperforms global competitors and quickly gets the ground.”