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DoorDash has agreed to buy food delivery company Deliveroo in a £2.9bn deal, ending the UK group’s tumultuous time on the public markets.
San Francisco-based DoorDash said it would pay 180p a share in cash for the UK group, which has struggled since it listed in London four years ago.
Deliveroo, which operates a food delivery app in nine countries, has faced stiff competition from rivals including Uber Eats and reported its first full year profit in March.
Consolidation is gathering pace in the food delivery sector as companies bet that increasing size will help them grow.
Earlier this year, Prosus — the European investment arm of South African group Naspers — struck a €4.1bn deal to take Europe’s biggest food delivery group Just Eat Takeaway private.
Deliveroo and DoorDash said on Tuesday that their boards had agreed the final terms of the cash deal.
DoorDash’s operations are focused in the US, Canada, Australia and New Zealand and do not overlap with those of Deliveroo, which was founded by chief executive Will Shu in 2013.
The FT previously reported that DoorDash hoped the lack of overlap meant the deal would not be blocked by competition regulators.
DoorDash has expanded abroad, notably through a €7bn all-stock deal for Finnish delivery app Wolt in 2021. The company operates in more than 30 countries.
Deliveroo’s acquisition by DoorDash brings to an end a challenging time for Deliveroo as a UK-listed company: its shares fell sharply after its 2021 initial public offering and never recovered.
Shu said the DoorDash deal was “the beginning of a transformative new chapter” for Deliveroo — the US group is about 30 times its size based on market capitalisation.
“The enlarged group will have the scale to invest in product, technology and the overall consumer value proposition,” he said.
Tony Xu, chief executive and co-founder of DoorDash, said the deal would bring together “DoorDash’s strong operating playbook with Deliveroo’s local expertise”.
Both companies have been expanding into grocery and other types of retail delivery and developing their advertising businesses to boost profitability.
Sean Kealy, analyst at Panmure Liberum said Doordash’s intention to increase investment in Deliveroo indicated that the deal was designed to “support competitiveness in its markets.”
“[It’s] a clear indication that DoorDash is acquiring the business to accelerate its growth,” he said.