Investing.co -- DoorDash (NASDAQ: DASH ) has agreed to buy U.K. food delivery company Deliveroo Holdings (LON: ROO ) (OTC: DROOF ) in a deal valued at £2.9 billion ($3.85 billion), the companies announced Tuesday. The move marks a significant step in the U.S.-based platform’s strategy to broaden its international presence.
Deliveroo shares climbed 2% in London trading.
The agreement follows a proposal made last month, with DoorDash offering 180 pence per Deliveroo share. The company said then that the offer is final and will not be increased.
Deliveroo had disclosed in April that it received a £2.7 billion ($3.6 billion) offer from DoorDash. The bid came after Deliveroo’s share price had dropped nearly 50% since its 2021 IPO, pressured by cooling post-pandemic demand and a shift in investor focus toward more profitable businesses.
Earlier this year, Deliveroo announced plans to exit the Hong Kong market, offloading some assets to Delivery Hero’s foodpanda. The Hong Kong business, which accounted for about 5% of total transaction value, had been operating at a loss.
The acquisition is not expected to face significant regulatory resistance. The deal gives DoorDash entry into 10 new markets where it currently lacks a footprint, making the expansion largely complementary and less likely to raise antitrust concerns, according to Reuters.
Jefferies analysts said today’s offer from DoorDash "has arrived well ahead of the 23-May deadline, suggesting that the engagement to date had been more substantive than originally signalled."
They note that the takeover will proceed through a Scheme of Arrangement, which requires 75% shareholder approval, but DoorDash has secured irrevocable commitments for only 15.429% of shares, including 6.398% from founder Will Shu. The all-cash nature of the deal and lack of detail about Shu’s future role after the takeover suggest he may walk away, analysts said.
"We reiterate our view that we see a definite, albeit small, possibility of interest from a counter bidder emerging from here," they wrote.
This is DoorDash’s second major push into Europe, following its 2021 acquisition of Finnish delivery company Wolt Enterprises in an all-stock deal worth approximately $8 billion.
The offer marks the latest instance of consolidation in the food delivery sector, following Prosus ’ (AS: PRX ) agreement in February to acquire Amsterdam-based Just Eat Takeaway (AS: TKWY ).