Deliveroo shares soar after $3.6 billion DoorDash takeover approach

By Paul Sandle and Chandini Monnappa

LONDON, April 28 (Reuters) - Shares in British meal delivery company Deliveroo ROO.L jumped 17% in early deals on Monday, the first trading session after it said it had received a $3.6 billion cash buyout proposal from U.S. peer DoorDash DASH.O.

Deliveroo said on Friday it would likely recommend the 180 pence-per-share offer, received on April 5, to shareholders, subject to agreement on other terms.

Deliveroo shares rose to 174 pence on Monday, the highest level since Jan. 2022.

The proposed offer, which DoorDash must confirm by May 23 or else walk away, represents a 22.8% premium to Deliveroo's Friday closing price.

The shares were sold at 390 pence in the biggest London listing for almost a decade in 2021, a time when meal delivery services were boosted by the pandemic.

The shares only once rose above their listing price - in August 2021 - before they dropped at the end of 2021 and did not recover on concerns about the profitability of the sector.

The deal is expected to face no regulatory hurdles, as DoorDash has virtually no presence in Deliveroo's 10 markets, a source told Reuters on Friday.

Last year, Reuters reported DoorDash had shown interest in a takeover of Deliveroo, but a source said talks ended after disagreements on valuation.

Britain and Ireland is Deliveroo's largest market, accounting for 62% of the value of its orders in its latest quarter. The market is roughly equally split between Just Eat, Uber Eats and Deliveroo.

Its other large markets include France and Italy.

A deal could net Deliveroo founder and chief executive Will Shu about 172 million pounds based on his 6.4% shareholding. Amazon is Deliveroo's largest investor, with a 14.38% stake.

Analysts at Jefferies said a deal would meaningfully expand DoorDash's global reach.

"DoorDash's track record of share gains both in the U.S and internationally suggest the same playbook could help drive faster growth across Deliveroo's attractive geographical footprint," they said.

On Monday, Deliveroo said following the approach, it was suspending its 100 million pounds buyback programme immediate effect and any recommencement of the programme would be announced to the market.

($1 = 0.7511 pounds)