Doordash (NASDAQ: DASH) is synonymous with U.S. food delivery, and now it seems the company is positioning itself as the European market. The delivery giant announced it will acquire Driveroo in the UK for $3.9 billion in a deal of $3.9 billion. Deliveroo in the UK is like Doordash, and it is one of the most well-known names in its geographical market.
Reuters said the deal has been working hard over the past few months, indicating a changing situation in the food delivery business. According to Reuters, the industry has been struggling due to several factors. First, inflation and rising costs force consumers to tighten their belts and then dialing back luxury items such as dinner delivery is an easy way to cut costs. Secondly, there are too many competitors in the industry.
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The two barriers to profit create an environment where mergers are more likely. My clock Investment Director Las Mould He believes the entire industry has been weakened by oversaturation of delivery services that compete with the same customers. This climate inevitably means that some food delivery services operating today will not survive the current downturn.
"Only the strongest people can survive, they are the people who pick smaller competitors, and they realize that their future is (a larger entity) rather than one person," he said.
Doordash may have received a lot of deals on the final price. Driveroo shares are trading at less than half of its 2021 IPO price, Reuters reported. CEO of Deliveroo Will be comfortableIn the company's growth, he served his own meals, which was philosophical about the current business atmosphere and its impact on the company's stock price.
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“It was a different period and a different interest rate environment,” Shu told Reuters. He is optimistic about Deliveroo's long-term future, but is also very aware of the competition his company faces. “The board and myself evaluated it and said, ‘Where should we think we should be winning for us?’ We think that’s the right place for us,” he said.
Shu's analysis illustrates the reality of becoming a company's CEO. It is your responsibility to shareholders and investors to do the best things for the company, even if it means being acquired by a large company at a relatively discounted price. That being said, this is not all bad news for Shu. Reuters estimates he will receive about $215 million in deliveries.
"I'm excited about the prospect that Doordash and Deliveroo will be able to accomplish together," said Doordash CEO. Tony Xu. “We will cover more than 40 countries with a population of more than 1 billion, allowing us to provide more local businesses with the tools and technologies they need to thrive.” Reuters estimates that the two companies will have approximately $90 billion in delivery orders in 2024.
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This article is Doordash's plan to swallow Europe? The deal for the company strikes $3.9 billion to buy a UK food delivery company initially appeared on benzinga.com
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