DoorDash’s strategic purchase of Deliveroo at half its 2021 IPO valuation triggers EU antitrust scrutiny while reshaping Europe’s food delivery landscape amid union protests and Uber Eats’ countermove into groceries.
DoorDash announced its $3.9 billion acquisition of UK-based Deliveroo on July 15, 2024, marking the largest food delivery merger since the pandemic. The deal values Deliveroo at 44% below its 2021 IPO price despite achieving its first annual profit last year. EU regulators immediately launched antitrust probes while Uber Eats expanded grocery partnerships in France, setting the stage for a complex battle in Europe’s $45B food delivery market.
Valuation Rollercoaster Sparks Investor Concerns
Deliveroo’s $7 billion 2021 IPO valuation evaporated despite 2023’s milestone £23M profit (3.1% EBITDA margin). “This fire sale reflects delivery platforms’ fundamental valuation crisis,” said Morgan Stanley analyst Elena Marquez, noting sector-wide 68% share price declines since pandemic peaks.
Regulatory Gauntlet Looms Large
The European Commission’s Phase 2 review (initiated July 19) focuses on 15 cities where combined market share exceeds 60%, including London and Paris. Reuters reported regulators considering mandatory restaurant fee caps similar to Spain’s 2023 delivery law.
Labor Storm Clouds Gather
UK’s Independent Workers Union plans strikes August 1, fearing algorithmic pay cuts. The EU’s June 2024 Platform Work Directive could force DoorDash to reclassify 100,000+ riders as employees, increasing costs by 25% (Bloomberg Economics).
Historical Context: From Growth Frenzy to Margin Reality
The acquisition mirrors Uber’s 2020 purchase of Postmates, which failed to achieve projected synergies. Like Deliveroo, Postmates had reached profitability just before acquisition but faced identical labor cost escalations post-deal. Meanwhile, Just Eat Takeaway’s disastrous $7.3B Grubhub purchase in 2020 shows how consolidation often amplifies operational risks in low-margin sectors.
Scale vs. Sustainability Paradox
While combined operations could save £150M annually in marketing costs (Bernstein analysis), history suggests delivery mergers struggle with localization. Deliveroo’s 2019 retreat from Germany and DoorDash’s failed 2022 Dublin launch demonstrate the sector’s resistance to cookie-cutter expansion models.
