DoorDash Inc. (NYSE:DASH) reportedly expressed interest in acquiring British food delivery company Deliveroo Plc. (OTC:DROOF), but discussions stalled due to valuation disagreements.
What Happened: DoorDash, a major player in the U.S. food delivery industry, initiated talks with Deliveroo last month, sources familiar with the matter told Reuters. The discussions ceased after the two companies failed to reach an agreement on Deliveroo's worth.
The report states that there are currently no ongoing negotiations between the two firms. DoorDash and Deliveroo did not immediately respond to Benzinga's request for comment.
Since its March 2021 initial public offering, Deliveroo's shares have been under pressure due to a slowdown in online food delivery demand post-COVID-19 and investor preference for more profitable ventures amid rising interest rates.
The company collaborates with 180,000 restaurants and retail partners and maintains a network of 140,000 riders. Amazon.com Inc. holds the largest stake in Deliveroo at 13.23%, followed by DST Global at 7.54%.
Deliveroo CEO Will Shu, who co-founded the company with childhood friend Greg Orlowski in February 2013, holds a 6.46% stake, according to London Stock Exchange Group data.
Why It Matters: In 2022, DoorDash, with a market value of $46.57 billion, reportedly considered acquiring Deliveroo. In a January interview with the Financial Times, DoorDash CEO Tony Xu indicated the company's strategic interest in diversifying beyond its core U.S. market.
The food delivery industry has been facing significant challenges, with the top four publicly listed companies in the U.S. and Europe, including Deliveroo, DoorDash, Just Eat Takeaway, and Delivery Hero, collectively accumulating over $20 billion in operating losses, as reported in May.
Amid this challenging economic climate, companies like Starbucks Corp. (NASDAQ:SBUX) have been expanding their delivery services to attract more customers.
Price Action: DoorDash Inc.'s shares closed at $112.08 on Tuesday, rising 1.25% for the day. In pre-market trading, the stock dipped slightly by 0.071%. Year to date, DoorDash has seen a significant increase of 16.19%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote