Doordash, Deliveroo Takeover Talks End on Valuation Disagreement, According to Report

Doordash (NASDAQ: DASH) reportedly showed interest in acquiring Deliveroo (LON: ROO) last month, according to Reuters (citing sources), but discussions ended due to disagreements on valuation.

The US meal delivery giant is said to have approached Deliveroo, but talks stalled after they couldn't agree on a price for the British company.

This potential acquisition comes amidst a slowdown in the online food delivery sector since the pandemic, which has impacted Deliveroo's share price significantly since its IPO in 2021.

Despite a more than 21% gain over the last 12 months, the stock is trading at 127.5p, well below the 390p the company priced its shares at in its IPO. It is up just 0.87% this year.

The London-listed company boasts a network of 180,000 restaurant partners and 140,000 riders, but its stock has fallen by 68% compared to its August 2021 peak.

This isn't the first time Doordash has considered acquiring Deliveroo. The Sunday Times reported similar talks in 2022, though neither company confirmed them at the time. Doordash CEO's recent comments about expanding outside the U.S. market further fueled speculation about a potential deal.

In March, Deliveroo was upgraded to Buy from Hold with a price target of 150p, up from 130p at HSBC. The bank told investors in a note that it had underestimated Deliveroo's ability to quickly enhance unit economics and cut costs.

At the time, HSBC said it was seeing an improvement in profitability, outshining a “lacklustre growth outlook.”

Despite “all issues,” HSBC said there was good value in Deliveroo and that its sizable net cash position could be put to better use via shareholder returns, which should help momentum.