DoorDash Goes on European Deal Hunt Just Months After IPO
(Bloomberg) -- DoorDash Inc., the largest food-delivery company in the U.S., is seeking acquisitions in Europe, adding another well-capitalized competitor to an already crowded market.
The company has made inquiries about potential food delivery targets in Europe, according to people familiar with the matter, who asked not to be named discussing private information. Germany and the U.K. specifically are countries on DoorDash’s radar, one of the people said.
DoorDash is also interested in expanding in the grocery delivery space in Europe, one person said. The U.S. company may decide not to do a deal, and has also considered going it alone, two of the people said.
A representative for DoorDash declined to comment. Shares in Deliveroo Plc rose 1.9% on Friday, while Just Eat Takeaway.com NV fell 1.5%.
Europe has become a hotbed of startups offering variations on smaller grocery orders, while the U.K. has long been a market leader in larger, weekly delivery. Startups including Turkish retail delivery app Getir and Berlin-based grocery delivery app Gorillas have rapidly hit billion-dollar valuations. In the U.K., London-based Deliveroo signed a two-year partnership with grocer Waitrose to expand its delivery service to 150 shops across the country by the end of the summer.
San Francisco-based DoorDash commands 55% of the food-delivery market share in the U.S., according to Bloomberg Second Measure. It also operates in Canada and Australia but has yet to enter Europe, unlike rival Uber Technologies Inc.’s delivery unit. DoorDash’s first foray into grocery delivery in the U.S. was last August when it partnered with chains like Meijer and Wegmans.
After an initial public offering in December, in which the company’s shares surged 86% the first day, the stock continued to gain until warning signs of a post-pandemic pullback emerged in February. In its fourth-quarter earnings report, DoorDash said it expected declines in consumer engagement and order values as restaurants begin opening up. It’s also battling potential permanent caps on the fees it can charge restaurants for delivery. Earlier this week DoorDash unveiled a new, tiered pricing plan for restaurants.
In Europe, one battleground that has emerged is Germany, where Uber recently announced a planned entry into the market currently dominated by Just Eat Takeaway.com. Finnish startup Wolt also raised $530 million in January as part of an expansion plan into new countries.
“It was inevitable that valuation arbitrage and grocery would be a factor in the next wave of sector consolidation,” said Giles Thorne, analyst at Jefferies, in a note to clients Friday.
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