British rival and fellow food delivery giant Deliveroo got its own surprise takeover offer on Friday from American rival DoorDash. This historic agreement is worth $3.9 billion. This strategic partnership increases each company’s advantages in the highly competitive food delivery space. Together, they can now collectively reach over 40 countries and serve more than 1 billion people.
On Thursday, Deliveroo confirmed that it had received a first approach from DoorDash on April 4. This was the actual last business day before the announcement. On a fully diluted basis, the terms of the deal value Deliveroo at £2.9 billion ($3.9 billion). This figure reflects only a 44% premium over its closing price on that day. After the takeover bid was announced, Deliveroo shares climbed to a price not seen for three years.
This acquisition makes DoorDash the undisputed second largest player in the global food delivery space. It’s focused on giving local businesses the better tools and technology they need to succeed in a digital marketplace that gets more competitive by the day.
The Reaction
Tony Xu, DoorDash’s CEO and Co-founder, was excited about the partnership.
“I could not be more excited by the prospect of what DoorDash and Deliveroo will be able to accomplish together. We’ll cover more than 40 countries with a combined population of more than 1 billion people, enabling us to provide more local businesses with the tools and technology they need to thrive.” – Tony Xu, CEO and Co-founder of DoorDash.
At the same time, the merger would combine two well-respected platforms—each with distinct strengths in their home markets—on shore to create a true global leader. The result is that DoorDash has developed an enormous share of the U.S. user base. In the meantime, Deliveroo has gained a high profile and strong market share in the UK and other European markets.
By pooling their resources and knowledge, DoorDash and Deliveroo hope to improve their customer offerings and grow their market share. This action could make waves across the costly food delivery industry. By tapping their unique technologies and logistics, they provide unique and superior experiences intensely focused on the customer.
Author’s Opinion
This merger represents a significant consolidation in the food delivery space, making it clear that only the strongest, most resourceful companies will thrive in this highly competitive market. The combined power of DoorDash and Deliveroo could reshape the landscape, but the real test will be whether they can integrate their technologies and maintain customer loyalty in an increasingly crowded market.
Featured image credit: inmediahk via Flickr
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