DoorDash CEO Admits Company is 'Speck of Dust,' Then Offers $3.6bln for Just Eats Sloppy Seconds

DoorDash has already set fire to the U.S. food delivery market since its inception, but now… they want to torch Europe too. In short, Deliveroo, Britain’s second-favorite way to overpay for soggy kebabs, confirmed it’s been approached by DoorDash with a proposal to buy all its outstanding shares at £1.80 apiece ($2.40 in real cash monay). 

(Source: Giphy) 

The math looks like this: with about 1.5 billion shares floating around, that puts the deal at £2.7 billion ($3.6 billion). Deliveroo’s board, displaying the survival instincts of a wounded gazelle, said they would be “minded to recommend such an offer” — which is a long-winded, painfully British way of saying “yes please”. 

Now, not that this should shock anyone, but Deliveroo’s been limping along for a while, still clinging to its unfortunate reputation of being Just Eats sloppy seconds. Meanwhile, their horrific brand strategy has played a major part in shares being kneecapped -37.84% over the last five years. But DoorDash though, well, they saw blood in the water and did what any good American company would do: offered just enough cash to look generous without actually overpaying.

(Source: Wall Street Journal) 

And apparently, DoorDash isn’t playing around with this one. Especially as their CEO, Tony Xu, recently whined admitted to Fortune that DoorDash still feels like a “speck of dust” in the broader economy. Meaning Xu and Co. could give a rats ass about potential synergies or whatever feel good metrics that helps them sleep at night regarding this deal. Instead, this is consolidation at its laziest and most brutal. DoorDash is doing what every smart (read: ruthless) player does when markets mature: they’re rolling up the competition before someone else does. Deliveroo just happens to be the sad little piñata left hanging after Uber Eats and Just Eat already had their turns.

What’s more is that DoorDash reports earnings May 7th, so it’s more than just a coincidence that they’ve decided to air out this one-item laundry list worth $3.6 billion right now. Why? Because nothing juices a narrative like a mountain sized acquisition announcement to distract from whatever hell is brewing in their Q1 numbers. Meanwhile, Deliveroo’s last quarterly earnings were a masterclass in mediocrity with higher revenue thanks to gross-transaction-value growth in key markets. Translation: They may not be the smartest tool in the shed, but they are definitely worth a second look. 

(Source: Guardian) 

So then, what’s next? Well, technically, DoorDash has until May 23 to make a firm offer. But honestly, unless Tony Xu wakes up between now and then and decides he’d rather light that $3.6 billion on fire than buy Deliveroo, this thing is happening. In fact, just from the vibes I have received so far, Deliveroo’s management already looks like they’re halfway packed LOL. 

But alas, this is another example of the food delivery industry eating itself alive. Margins are garbage, customer loyalty is a myth, and the only way to survive is to get big enough that you can crush the next guy before he crushes you. It's capitalism at its most honest, and truest form. ‘Merica!  Simply put, DoorDash isn’t content with building a delivery platform. They want to build the key infrastructure for human laziness. And frankly, it’s brilliant. You can laugh at the absurdity of spending billions to own more unprofitable market share, but DoorDash is playing a game most companies don't even realize they’re losing yet.

(Source: Giphy) 

And if Deliveroo’s shareholders have even a fraction of a brain left, they’ll take the cash, smile for the cameras, and get out before DoorDash figures out they were probably overpaying. Again. For now though, keep an eye on DoorDash especially once they make headlines with their earnings report—because right now, they definitely have a catalyst on their side. A catalyst, might I add, that will either make the bad sh*t look less depressing, or make the good sh*t look absolutely genius. So yeah, place your bets accordingly, friends. Until next time… 

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Stocks.News holds positions in Uber as mentioned in the article.