The takeover of Deliveroo could leave a bitter taste

As US food delivery giant DoorDash snacks on its UK rival, the market is being concentrated in the hands of a few big players which isn’t good for customers,

- James Moore

Cheerio, Deliveroo! Or should that be “Later, dude”?

Hungry US giant DoorDash has submitted a formal order for a takeout of Deliveroo, with a side of fries. The UK delivery outfit said it was happy with the £2.9bn price it was quoted. Founder Will Shu, who is known to still take shifts delivering the regular kind of meal, will get a handsome tip. Estimates have put that at roughly £170m, based on the size of his stake.

Those who bought in when the company became a rare example of a tech firm that stayed at home when it floated in London may have mixed feelings about that (though perhaps we should call it tech-adjacent, given that it’s primarily a delivery business and just happens to use the internet).

Deliveroo floated in 2021 at 390p a share, which valued the company at roughly £7.6bn. The dismal subsequent performance of its stock helped to put the entire London IPO market into cold storage. More fool those who believed the hype and bought into a marginally profitable outfit with, shall we say, “issues”. Those included the pay and conditions of the freelancers who bring the food to customers’ doors, who have staged a number of protests.

We will now, no doubt, hear concerns expressed about, yes, another UK business being gobbled up by a rival from the US – all the more so given the deeply hostile economic behaviour of America’s Trump-led government. But while that’s understandable, the reality is that if it wasn’t DoorDash, it would have been someone else. The food-delivery business is consolidating fast, and is set to become dominated by a handful of global giants. JustEat’s takeover by Prosus in February is another example of this.