26th Jun 2024 09:45
(Alliance News) - Deliveroo PLC attracting takeover interest from larger US peer DoorDash Inc was no surprise to analysts at Jefferies, as valuation gaps lend themselves to "cross-border M&A".
Citing two people familiar with the matter, Reuters reported the talks between London-listed Deliveroo and DoorDash ended due to a disagreement on valuation.
Shares in takeaway delivery company Deliveroo traded 3.9% higher at 132.41 pence each in London on Wednesday morning. It has a market capitalisation of GBP2.15 billion. DoorDash rose 1.3% in New York on Tuesday, valuing it at USD45.83 billion.
Deliveroo shares are up 24% over the past year, but have slipped some 9% over the past month. Shares are down around two-thirds from its 390p initial public offering price. It floated in March 2021.
"The Reuters article this evening reporting that DoorDash and Deliveroo held takeover talks last month validate what we have been arguing since our December 23 note," Jefferies analysts said, referring to research where it predicted M&A activity in the food delivery sector.
"The large gap in US versus Europe trading multiples will be a catalyst for the return of cross-border M&A in online food delivery in 2024."
It added: "Deliveroo's quality of market positions, strategy, execution and balance sheet make it the sector strategic asset."
By Eric Cunha, Alliance News news editor
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