Analysts suggest that other bidders may come forward soon. Shares of the UK food delivery service Deliveroo rose after reports that US rival Doordash had held takeover discussions with the company.
Reuters reported that Doordash expressed an interest in a Takeover of Deliveroo, but the talks ended when the two parties could not agree on a value for the deal.
The London-listed firm’s shares jumped 6% on Wednesday morning to 136p, and closed the day 1.2% higher, valuing it at £2.1bn.
The value of the shares had dropped by more than half since debuted on the stock exchange back in March 2021. The much-touted floatation of a pandemic story was a disappointment. Some traders called it “Flopperoo.
Doordash shares listed in New York initially fell after the news was announced on Tuesday. However, they recovered to close at 1.25% higher.
Jefferies analysts said that the talks had failed in this case. We wouldn’t be surprised if similar headlines reappear in the near future, given the strength of the financial and industrial logic behind a Deliveroo acquisition.
We believe that the key to unlocking an offer recommended by Deliveroo lies in understanding the sensibilities and values of Will Shu, the CEO founder. This could be just the beginning.”
Delivery applications including Deliveroo flourished when the Covid-19 locksdowns occurred, and people were stuck in their homes while restaurants were closed. But since then, demand for online food has declined. Deliveroo’s shares have been impacted by investors’ preference for higher-profitable businesses in the face of rising interest rates. Deliveroo works with over 180,000 retailers and restaurants, and has a network that includes 140,000 riders.
Amazon began investing in Deliveroo, and it is the largest shareholder, with a 13.2% share. Next comes DST Global, a venture capital company based in Cayman Islands, with 7.5%. Shu holds a 6.5% stake. Amazon was previously tipped to be a possible buyer of Deliveroo.
Deliveroo is under fire because of the way it treats its riders who are not directly employed and are paid per delivery. Deliveroo declined to comment about the takeover discussions.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.