After Deliveroo PLC (LSE:ROO) revealed it had received a possible £2.7 billion offer from New York-listed Doordash, analysts said a rival bid could emerge as the price was not particularly high.
The UK takeaway food delivery outfit suspended its buyback this morning, having revealed the 180p-per-share indicative offer after the market had closed at the end of last week, with talks ongoing and Deliveroo saying it would be minded to accept.
A price of 180p "is by no means a knockout valuation", said analysts at Panmure Liberum, "and so we see potential for Deliveroo to receive a counterbid".
The analysts said early 2025 is seeing the online delivery industry "shakeout [entering] its final phase: global consolidation", with a simultaneous take-private offer for rival Just Eat Takeaway from tech group Prosus.
If the Deliveroo deal is executed effectively, it "could be a kingmaker asset for Doordash in the UK and Europe", they added.
The indicative price is less than half the 390p price at which Deliveroo completed its IPO in 2021.
"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", said analyst Susannah Streeter at Hargreaves Lansdown.
While the company revealed in March this year that it has broken through into profitable territory, "the prolonged bout of indigestion around its share price has continued", said Streeter.
"The delivery market is in an era of consolidation with tech giants vying for opportunities right across the consumer-focused space with potential to offer groceries, restaurant-made meals and financial services in simple clicks."
The Doordash-Deliveroo deal will be "unappetising for the government", Streeter added, as Downing Street 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 in the pipeline to make up the numbers. Even despite the recent volatility, hitting Wall Street and London-listed firms have not been immune and UK-listed companies are still undervalued compared to US peers."