Shares in meal delivery platform Deliveroo have surged by 17% as investors react to news of a £2.7bn takeover proposal.
The company revealed after the market had closed on Friday that it had been in talks since 5 April with US rival DoorDash.
Deliveroo suggested then it was likely the 180p per share offer would be recommended, though full terms were yet to be agreed.
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At that price, the company’s founder and chief executive, Will Shu, would be in line for a windfall of more than £170m.
Deliveroo further announced, before trading on Monday, that it had suspended its £100m share buyback programme.
The opening share price reaction took the value to 171p per share – still shy of the 180p on the table – and well under the 390p per share flotation price seen in 2021.
Deliveroo’s shares have weakened nearly 50% since their market debut.
The deal is not expected to face regulatory hurdles as it provides DoorDash access to 10 new markets where it currently has no presence.
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But a takeover would likely represent a blow to the City of London given the anticipated loss of a tech-focused player.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “If the deal is done at that price, the company will fail to shake off the ‘Floperoo’ tag it was saddled with after its disastrous IPO debut in 2021.
“Even though Deliveroo has finally broken through into profitable territory, the prolonged bout of indigestion around its share price has continued.
“The surge in demand for home deliveries during the pandemic waned just as competition heated up. Deliveroo’s foray into grocery deliveries has helped it turn a profit but it’s still facing fierce rivals.”
She added: “The DoorDash Deliveroo deal will be unappetising for the government which has been trying to boost the number of tech companies listed in London.
“If Deliveroo is purchased it would join a stream of companies leaving the London Stock Exchange, with too few IPOs [initial public offerings] in the pipeline to make up the numbers.”
