Deliveroo suspends share buyback programme amid US takeover talks

Deliveroo has suspended a £100m share buyback programme, days after confirming it had received a £2.7b buyout proposal from US food delivery app DoorDash.

The British food delivery company had announced the £100m Buyback Programme on 18 March, having posted a profit for the first time since its founding in 2013.

It said in a notice on London Stock Exchange: “Any recommencement of the Buyback Programme will be announced to the market.”

Last week, Deliveroo confirmed it had received an “indicative proposal” from DoorDash regarding a takeover of the business on 5 April.

DoorDash operates across the US, Canada, Australia and New Zealand, which means its markets do not overlap with those of Deliveroo, especially with the latter having exited Australia in 2022.

The board of Deliveroo said “it would be minded to recommend” the offer of £1.80 per Deliveroo share to shareholders.

At the time of its flotation on the London Stock Exchange in 2021, Deliveroo had been valued at roughly three times the price, at £7.6b.

A statement on London Stock Exchange added: “Accordingly, the Board of Deliveroo decided to engage in discussions with DoorDash in relation to the Possible Offer and has provided DoorDash with access to due diligence.

“There can be no certainty that any firm offer for Deliveroo will be made. At this time, shareholders are advised to take no action in respect of the Possible Offer.”

Deliveroo was founded by William Shu and Greg Orlowski in 2013, but has been struggling to cash in following its highly anticipated flotation on the London Stock Exchange in 2021.

At the time, Deliveroo had announced an initial public offering valuing the company at £8.8b, making it the biggest London stock market debut since that of mining and commodity trading firm Glencore in 2011, but it ended up pricing its shares at the lowest end of the range it had previously suggested, at £7.6b.