DoorDash Acquires Deliveroo for 38.5 Billion USD, Expands European Presence

DoorDash, a prominent food delivery company based in the United States, has announced its acquisition of Deliveroo, a leading competitor in the United Kingdom. The deal values Deliveroo at approximately 29 billion pounds (38.5 billion USD), with both companies aiming to leverage their combined influence and local expertise to navigate the competitive landscape.

In addition to the Deliveroo acquisition, DoorDash revealed on Tuesday that it would also be acquiring SevenRooms, a New York-based software company specializing in hospitality solutions, for around 12 billion USD. This strategic move comes as the food delivery industry faces increasing challenges due to inflation and consumer spending constraints, making it difficult for companies to scale effectively.

The acquisition of Deliveroo will significantly expand DoorDash's presence in Europe, allowing it to compete more effectively with rivals such as Just Eat and Uber Eats. By integrating Deliveroo's largest markets, including the United Kingdom and Ireland, along with other regions, DoorDash aims to strengthen its global footprint. Tony Xu, CEO of DoorDash, highlighted the potential for new product launches in these markets during a post-earnings call.

Both companies anticipate that by 2024, the combined order value of Deliveroo and DoorDash will reach approximately 900 billion USD, with monthly active users totaling around 70 million and 420 million, respectively. This acquisition is expected to enhance DoorDash's ability to offer a broader range of services and products, further solidifying its position in the competitive food delivery market.

DoorDash has stated that it will not increase its offer for Deliveroo but reserves the right to do so if a third party submits a competing bid. Deliveroo has already secured support from investors holding 15.4% of its shares, and the deal requires approval from at least 75% of Deliveroo's shareholders to proceed. The absence of Amazon, Deliveroo's largest shareholder with a 14.38% stake, has been noted, with some analysts speculating that Amazon could still be a potential bidder.

The acquisition is expected to face minimal regulatory hurdles, as DoorDash has limited operations in the 10 markets where Deliveroo operates. This strategic move by DoorDash underscores the growing trend of consolidation in the food delivery industry, as companies seek to enhance their market positions and operational efficiencies in the face of economic challenges and intense competition.