In a significant move within the food delivery sector, DoorDash Inc. has announced its acquisition of UK-based food delivery service Deliveroo for approximately £2.9 billion ($3.88 billion). This strategic acquisition aims to enhance DoorDash's presence in the UK market while also expanding its global operations.
The deal, which values Deliveroo at £1.80 ($2.40) per share, represents a 29% premium over the share price on April 24, 2025, prior to the announcement. This acquisition marks DoorDash's second major international investment in three years, following its purchase of Helsinki-based Wolt Enterprises in 2022. Post-acquisition, DoorDash is set to operate in over 40 markets worldwide, solidifying its position in Europe, Asia, and the Middle East.
Deliveroo, founded in 2013, has grown to become a key player in the food delivery industry, active in nine countries, including the UK, France, Italy, and the UAE. In 2023, the UK and Ireland accounted for 59% of Deliveroo's business, underscoring the importance of this market for both companies.
DoorDash's CEO and co-founder, Tony Xu, expressed enthusiasm about the acquisition, stating, "Our mission at DoorDash is to grow and empower local economies. We started the company in 2013 to help people like my mom – people running local businesses and creating the vast majority of jobs and economic activity in our communities." He emphasized the shared vision between DoorDash and Deliveroo, noting that both companies are focused on improving customer experiences and supporting local businesses.
Will Shu, Deliveroo's co-founder and CEO, echoed these sentiments, declaring, "When Greg and I founded this business in 2013, we made it our mission to bring the best of our consumers’ neighborhoods to their door. We’ve stayed relentlessly focused on this mission for the past twelve years, keeping our consumers at the heart of everything we do." Shu described the merger as the beginning of a "transformative new chapter" for Deliveroo, highlighting the potential for increased investment in products and technology.
The acquisition comes at a time when Deliveroo has faced challenges since its initial public offering (IPO) in London in 2021, which was initially celebrated as one of the hottest IPOs but quickly turned sour. Deliveroo was valued at £7.6 billion at its IPO, but its shares tanked soon after trading began, languishing at about a third of their initial offer price of 390p. This downturn has raised questions about the company's future and profitability.
Market analysts have pointed to various factors contributing to Deliveroo's poor performance, including concerns over its dual-class share structure, which grants Shu significant voting power, and ongoing ESG (environmental, social, and governance) concerns regarding the precarious employment status of its riders. Some analysts believe that the markets underestimated Deliveroo's potential and misunderstood its business model.
As DoorDash prepares to integrate Deliveroo into its operations, it is expected to conduct a six- to twelve-month review of the merged group. While the exact changes remain unclear, DoorDash has indicated that it anticipates a potential reduction of about 1% to 3% of the combined workforce, primarily in general administrative roles. However, the company has also reassured stakeholders that it does not plan to make significant changes to Deliveroo's London headquarters or its existing agreements with labor unions.
The reaction to the acquisition has been mixed. Kathleen Brooks, research director at XTB, noted that while the deal is beneficial for short-term holders of Deliveroo shares, it may be disappointing for those who invested during the IPO. Russ Mould, investment director at AJ Bell, commented on the ongoing consolidation in the food delivery market, stating, "We’re now in the phase where only the strongest will survive and they’re the ones picking up smaller rivals who realize their future is best part of a bigger entity, not going it alone."
This acquisition reflects a broader trend of US firms acquiring UK-listed companies, particularly in the tech and food delivery sectors, where valuations have become more attractive. Deliveroo joins a list of UK companies that have been taken over by US buyers, including Morrisons and Darktrace, as investors look to capitalize on lower valuations in the UK market.
Despite the challenges faced by Deliveroo since its IPO, the merger with DoorDash is expected to provide new opportunities for growth and expansion. The combined entity will serve a population of over 1 billion people across more than 40 countries, positioning DoorDash as a formidable player in the global food delivery landscape.
As the merger progresses, customers of both DoorDash and Deliveroo are left wondering what changes may come. While the companies have not yet clarified whether the Deliveroo brand will remain post-merger, they have assured customers that until the acquisition is finalized, service levels will remain unchanged.
In summary, DoorDash's acquisition of Deliveroo marks a pivotal moment in the food delivery market, highlighting the ongoing consolidation trend and the challenges faced by tech firms in the UK. As the new entity prepares to navigate the complexities of merging operations and cultures, the focus will remain on delivering value to customers and supporting local economies.
