US meal delivery group Doordash flagged an interest in a takeover of the UK’s Deliveroo last month, two people familiar with the matter have told Reuters.
San Francisco-based Doordash reportedly approached Deliveroo, but talks ended after a disagreement on valuation.
The person who informed Reuters of this added that there are no talks ongoing.
Deliveroo and Doordash declined to comment.
Deliveroo’s shares have fallen by 67% since an August 2021 high of 395.9 pence, closing at 127.5 pence on Tuesday.
The London listed firm was valued at £2.1 billion and shares jumped by as much as 6% to 135.1 pence on Wednesday morning following the news.
Doordash’s New York-listed shares fell after the news, closing up 1.25% on Tuesday.
A slowdown in demand for food delivery since the Covid-19 pandemic, as well as investors’ preference for more profitable companies amid higher interest rates have weighed on Deliveroo’s shares since its initial public offering in 2021.
Deliveroo works with 180,000 restaurants and retail partners, operating a network of 140,000 riders.
'Industrial And Strategic Logic'
Following the Reuters report, analysts at Jefferies said the valuation gap between food delivery players in the US and Europe is a catalyst for cross-border mergers and acquisitions in online food delivery this year.
The analysts said, ‘In this instance, the talks have failed.
‘But such is the strength of the financial, industrial and strategic logic of a Deliveroo takeover, we would not be surprised to see similar such headlines re-emerge in the short term.’
Doordash, which as a market value of $46.57 billion, considered buying Deliveroo in 2022, according to The Sunday Times. Both companies declined to comment at the time.
In January of this year, the CEO of Doordash Tony Xu said in an interview with the Financial Times that the group was looking to diversify outside of its core market in the US.
In 2021, Doordash acquired Finnish service Wolt in an all-share transaction worth $8 billion.
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