DoorDash stock was pushing slightly higher in Monday trading, before easing back, as investors digested news that the food-delivery company had made a $3.6 billion offer to buy British delivery firm Deliveroo. Analysts were mostly positive on the idea.
London-based Deliveroo confirmed late Friday that it was approached by San Francisco-based DoorDash on April 5 with an offer to buy its business for 180 pence per share, or $2.40. The company's board said in a statement that it is open to the offer and provided due diligence access to DoorDash.
DoorDash shares gained a fraction to close at 187.88 on the stock market today. U.K.-listed Deliveroo shares jumped 17% to a three-year high.
DoorDash Analyst View On Deliveroo Proposal
Wall Street analyst commentary following the news Friday was mostly positive on DoorDash's interest in Deliveroo.
"The potential acquisition would meaningfully expand DoorDash's global reach, given the two businesses have virtually zero overlap," Jefferies analyst John Colantuoni wrote Monday. "In addition, DoorDash's track record of share gains both in the U.S. and international suggest the same playbook could help drive faster growth across Deliveroo's attractive geographic footprint."
Deliveroo's largest markets are the U.K. and Ireland, though it also operates in Belgium, France, Italy, Kuwait, Qatar, Singapore and the United Arab Emirates.
Those markets have minimal overlap with DoorDash's existing operations, including the 28 countries where its subsidiary Wolt operates. DoorDash acquired Finland-based Wolt in 2022 for $8 billion.
"Minimal overlap between the two companies means this would be another total-addressable-market expanding acquisition, similar to Wolt," noted Needham analyst Bernie McTernan in a client note Monday.
However, RBC Capital analyst Brad Erickson cautioned that the proposal could raise eyebrows among investors bullish about DoorDash's broader focus on expanding its runway for growth in existing markets.
"With this acquisition, bears could raise the question of whether that runway has become shorter and whether this would represent offense or defense to maintain growth," Erickson wrote. "The deal size is roughly half of what it paid for Wolt at a much lower valuation (though cash this time vs. stock for Wolt), however, given how competitive the European food delivery market is, we'd expect some skepticism as to whether this is the right move capital-allocation wise."
DoorDash Stock: Up 11% This Year
DoorDash stock has gained 11.5% this year, compared to a 6% slide for the S&P 500 year-to-date. DASH shares have carried momentum from a stronger-than-expected Q4. Investors appear less concerned about how tariffs will hit DoorDash's business compared to other tech firms. Food-delivery rival Uber Technologies has also outperformed this year.
DoorDash stock is on the IBD Tech Leaders list.
DoorDash will report its first-quarter earnings results on May 7.
