Food delivery giant DoorDash has agreed to acquire its UK rival Deliveroo for approximately $3.29 billion, marking a significant expansion into European markets. The deal, announced on Tuesday, will see DoorDash pay Deliveroo shareholders 180 pence per share, a 44% premium over the latter's share price on April 4, when the US firm made its acquisition offer.

The acquisition will grant DoorDash access to nine new markets in Europe, where Deliveroo operates primarily. The combined entity will operate in 40 countries and serve a total of 50 million monthly active users once the deal closes. This move is seen as a strategic play to compete more effectively with rivals such as Just Eat Takeaway and Uber Eats in the increasingly crowded food delivery market.

Deliveroo, founded in 2013, went public in 2021, capitalizing on the post-pandemic surge in demand for food and grocery delivery services. However, as COVID-19 fears subsided and consumers returned to in-person shopping and dining, the company struggled to adapt to changing consumer behavior. Deliveroo's shares had declined by more than 50% until April 4, and the company had exited several markets, including Hong Kong and Australia, citing intense competition.

In its latest financial report, Deliveroo posted revenue of about £2 billion and gross transaction value of £7.1 billion in the year ended December 2024. Despite the challenges, the company's scale and presence in key European markets made it an attractive target for DoorDash, which is seeking to expand its global footprint.

The acquisition is also seen as a sign of consolidation in the food delivery industry, which has faced significant headwinds in recent times. The rise of interest rates and subsequent decline in venture capital investments have forced many startups to reevaluate their business models and seek strategic partnerships or exits. The deal is expected to provide DoorDash with the necessary scale and resources to compete more effectively in the European market.

The acquisition is subject to regulatory approval and is expected to close in the coming months. Once completed, DoorDash will operate in 40 countries, making it one of the largest food delivery companies in the world. The deal is seen as a significant milestone in the company's expansion plans, and industry analysts will be watching closely to see how the combined entity navigates the increasingly competitive food delivery landscape.

In the broader context, the deal highlights the ongoing trend of consolidation in the tech industry, particularly in sectors that have been heavily impacted by changing consumer behavior and market conditions. As the industry continues to evolve, it will be interesting to see how companies like DoorDash and Deliveroo adapt to new challenges and opportunities, and how this acquisition will shape the future of the food delivery market.