DoorDash acquires Deliveroo for £2.9 billion — which is less than half of its initial public offering price.

      US food delivery leader DoorDash has purchased its British counterpart Deliveroo in a £2.9bn ($3.9bn) transaction, marking the conclusion of the UK company’s tumultuous period as a publicly traded entity.

      The cash offer, valued at £1.80 ($2.40) per share, reflects a 77% premium over Deliveroo’s recent market price. However, this acquisition price is less than half of its 2021 IPO valuation of £7.6bn.

      Deliveroo’s board has unanimously endorsed the deal. CEO and co-founder Will Shu, who holds a 6.4% stake in the company, is expected to receive £172mn.

      This merger will broaden DoorDash's presence in Europe, where it has been trailing behind competitors such as Uber Eats and Just Eat. Deliveroo's primary markets are in the UK and Ireland, accounting for approximately 60% of its overall orders. The company also operates in France, Belgium, and Italy within Europe.

      Tony Xu, CEO and co-founder of DoorDash, stated that the acquisition will unite two teams with “similar visions and values.” He expressed admiration for Deliveroo, noting, “[Together] we’ll cover more than 40 countries with a combined population of over 1 billion people, allowing us to equip more local businesses with the tools and technology needed to succeed.”

      Founded in London in 2013 by Shu and Greg Orlowski, Deliveroo rapidly evolved from a local startup into a global entity. It innovated the “dark kitchens” concept with its Deliveroo Editions model and launched a subscription service, Deliveroo Plus, in 2017.

      The company amassed a total of £1.2bn through several funding rounds, the most significant being a £432mn ($575mn) investment in 2019 led by Amazon. In 2021, Deliveroo went public on the London Stock Exchange amid the surge in demand for delivery during the COVID pandemic.

      However, the shares dropped 14% on their first day of trading, and the company found it challenging to satisfy investor expectations. By 2022, Deliveroo withdrew from markets including Australia, the Netherlands, and Germany to concentrate on its core operations.

      Despite these challenges, 2024 saw a turnaround, with Deliveroo reporting its first annual pre-tax profit of £12mn ($16mn). Nonetheless, DoorDash's offer was too attractive to pass up.

      “I want to thank all of our incredibly skilled employees, dedicated riders and merchants, and our loyal customers for helping us build the successful business we have today,” Shu remarked. “I hope they share our enthusiasm for the future.”

      Following the acquisition, up to 830 jobs may be eliminated, primarily in back-office positions, though both companies have committed to minimizing layoffs.

      Deliveroo will maintain its headquarters in London along with its current agreements with the GMB union. DoorDash has stated that the newly combined company will invest in technology and logistics to enhance competitiveness on a global scale.

      For Deliveroo, this marks the end of its independence, while for DoorDash, it represents a daring investment in Europe’s fragmented but still-expanding food delivery sector.