The acquisition of Driveoo by American peer Doordash is an inspiring example of different wealth and attractions in the U.S. and UK stock markets.

Doordash's Deliveroo Values ​​business is quoted at £2.9 billion and will create an operational company in more than 40 countries.

Although both companies are similar, their fates have varying significantly over the past few years.

Both were initially because the food delivery service provides customers with convenient and fast restaurant access and provides restaurants with the ability to make the most of their kitchen capacity.

Both expand on products to include other convenient shopping items such as diapers, flowers and pet food.

Both raise funds by selling stocks (IPOs) to the public at the same time - delivered on the London stock market on the New York Stock Exchange Doordash.

But when Deliveroo lists its stock in London, Doordash is five times worth of its UK counterparts. Four years later, Doordash is worth 35 times.

This is not a perfect comparison, as Doordash issues more shares to raise funds to expand over time, which will increase its total value - market capitalization. But interest in U.S. corporate stocks means it can successfully raise funds from the U.S. market.

Let's look at another measure - the price per share.

Investors who bought Doordash share rose by 84%.

The value of an investor who purchased a portion of the delivery service fell 56%.

This means Doordash can now take over its UK competitors with its bigger financial position - just as Deliveroo finally earns a profit.

Danny Rimer of Index Ventures, one of Deliveroo's first supporters, told the BBC in 2023 that he would vote for a U.S. listing if he had time again, while those close to the company agreed that the current bid for acquisition was part of Doordash's access to the U.S. capital markets.

This is just an example that helps explain a wider problem. The company is increasingly evading the London stock market, which is conducive to listing in the United States.

There are many reasons.

Higher valuation. The average value of 500 publicly traded U.S. companies (S&P 500) is 28 times the profit they make in a year. The 100 largest publicly traded UK companies (FTSE 100) have 12 times annual revenue sales. Less than half.

How could there be such a huge gap?

Part of the reason is that the United States is home to most of the most successful and profitable companies in the world - the so-called Seven (Alphabet, Amazon, Apple, Meta, Meta, Microsoft, Microsoft, Nvidia and Tesla)

Take out these and trade for 20x your return - still a huge premium in the UK.

One of the other reasons for UK valuations is the old-fashioned lack of demand.

UK investors' interest in UK stocks has shrunk.

Over the past 30 years, UK financial institutions have reduced their share of the UK market from 50% to less than 5%. Part of this is because financial regulation encourages pension funds to buy venture capital such as government bonds.

But that's also partly because managers of these pension funds think they'll get better returns in the U.S. market - they're dead.

Over the past five years, the total return, including dividends investing in U.S. stocks, was 116%, while the UK figure was the same as 45%.

But it is changing.

The government’s so-called “Edinburgh Reform” aims to make the UK more attractive listing, including reducing the proportion of companies that can be sold to the public and retaining more voting rights for founders who want to continue to control the company, even if they sell shares to other companies.

There are also positive comments about the UK’s appeal, such as Larry Fink of Blackrock and Jamie Dimon of JPMorgan.

Both of them pointed out that the UK looks undervalued and that the UK market has outperformed the US so far this year.

The secret to cheap stocks in the UK has been around for a while. That's why private buyers from the United States and elsewhere rush over UK-listed companies, which means they're gone from the UK stock market.

Even some of the biggest remaining are considered candidates. Shell owner Wael Sawan told the BBC that he and his company were “very warmly welcomed” despite his lack of plans to move immediately, and they held a big reception in New York. Shell deals with its U.S. listed peers at a 35% discount, and many of its shareholders are not satisfied with it.

Doordash's raid on Deliveroo seems to re-emphasize that companies listed in the U.S. can call for greater financial firepower to expand or gain competitors.

Deliveroo will join Arm Holdings, Morrisons, CRH Holdings, Ultra, Meggitt and many others as companies that once listed on the London Stock Exchange.

Does it matter? Whether in the UK, the US or one of the European exchanges, pension funds or individual investors can buy stocks.

However, the listing in the UK has produced an important auxiliary business for the UK financial services industry, which still accounts for more than 10% of the entire UK economy and over 10% of all taxes paid here.

Accountants, lawyers, financial PR companies and other companies provide benefits for the expenses incurred by listing in the UK.

The London Stock Exchange trades are dwarfed by the trading of currencies, bonds and complex contracts, but it has always been the center of financial activity, which many believe has lost its power to attract.