Uber in talks to buy Deliveroo in multi-billion dollar takeover

Pic:A bid for the Deliveroo would have to be above its latest valuation of $2 billion ( Bloomberg )
Business reporter(wp/es):

London's tech scene was set alight on Friday by reports that US giant Uber was in talks to buy takeaways giant Deliveroo for billions of dollars.

A bid for the capital’s tech darling would have to be significantly above Deliveroo’s latest valuation of $2 billion for a deal to be inked. Deliveroo’s owners are also concerned about giving up their independence.  

The talks, first reported by Bloomberg, would help boost Uber’s own Uber Eats service as the food delivery arena heats up. The taxi firm claims to have built the largest food delivery business outside China and is on track to make $6 billion (£4.4 billion) sales this year. 

However, insiders at Deliveroo cautioned against hopes for a deal. 

Talks were reported to be at their very early stages. Rival Just Eat’s shares fell 7% to 658p at the prospect of an even-bigger giant on its doorstep.

Shares in European peers Delivery Hero and Takeaway.com both fell 2%.

“This will be seen as a threat to Just Eat and other services such as Delivery Hero, where Uber also plans to acquire a Middle East business that would compete with the latter,” said Ian Whittaker, analyst at broker Liberum.  

He said, however, that Just Eat investors should feel “reasonably comfortable” even if a deal were to happen as it already had a considerable market share in cities where Uber and Deliveroo are weaker. 

Nigel Parson, analyst at Canaccord, said: “This is an area that’s really evolving fast and the big players are lining up. You could easily see Amazon coming in.”

Deliveroo, whose app is available in more than 200 cities on four continents, raised about $480 million (£363  million) last year from investors, who included Fidelity Investments and  T Rowe Price. 

Its early investors include innocent founder Richard Reed’s Jam Jar, Farfetch backer Felix Capital and private equity firm Bridgepoint. 

The business, which employs 900 staff in London, was in financing talks last year with Tokyo-based Softbank, one of Uber’s major backers but a deal never materialised. 

The speculation was that Uber had complained about the investor putting money into its rival.

Deliveroo made a £129 million loss, according to its last set of Companies House accounts. 

Deliveroo, Uber and Just Eat declined to comment.
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