26 June 2024

Deliveroo shares rise on reported takeover interest from US rival

26 June 2024

Shares in Deliveroo have been given a boost after reports of takeover interest from US rival DoorDash.

The takeaway delivery giant saw shares jump as much as 7% in morning trading on Wednesday amid speculation that the group is in the sights of the San Francisco-based competitor.

Deliveroo was reportedly approached by DoorDash last month over a possible acquisition, but the discussions are said to have ended after the pair were unable to agree on value.

Deliveroo declined to comment and DoorDash has been approached for comment.

It comes after rumours also swirled in 2022 that DoorDash was mulling a takeover of Deliveroo.

Such is the strength of the financial, industrial and strategic logic of a Deliveroo takeover, we would not be surprised to see similar such headlines re-emerge in the short term

Analysts at Jefferies said this “may only be the start” and could open the door to more takeover interest in Deliveroo.

They said: “In this instance, the talks have failed.

“But such is the strength of the financial, industrial and strategic logic of a Deliveroo takeover, we would not be surprised to see similar such headlines re-emerge in the short term.

“In our view, the key to unlocking a recommended offer from Deliveroo is understanding the sensibilities of the founder CEO, Will Shu.

“This may only be the start.”

Deliveroo, which was co-founded by chief executive Will Shu in 2013, operates in 10 countries and works with around 140,000 riders across the world.

The group posted a loss of £31.8 million for 2023, significantly smaller than the £294.1 million loss reported for 2022.

It said the number of orders decreased by 3% year on year to 290 million, but the annual gross transaction value (GTV), which means the total cost of people’s food baskets plus delivery and consumer fees, rose by 3% to £7.1 billion.

The firm said it returned to order growth in the first quarter of 2024, with a 2% increase.

The group has been beset in recent months by driver strikes over pay and working conditions.

Drivers gathered for a protest in London at the group’s annual general meeting last month, alleging that the delivery app company has failed to engage with them over poor pay and job security as they face growing financial difficulties.

Deliveroo has maintained that its “rider retention and application rates are high”, adding at the time that the “overwhelming majority of riders tell us that they are satisfied working with us”.

Shares in Deliveroo have been given a boost (David Davies/PA) (PA Wire)

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