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Investing.com -- Deliveroo (OTC:DROOF) shares surged more than 16% in early London trading Monday after the company said it has suspended its £100 million share buyback programme, just days after revealing it had received a takeover proposal from U.S.-based DoorDash (NASDAQ:DASH).
The company revealed on Friday that it had been approached on April 5 with a £2.7 billion bid, equivalent to 180 pence per share. Deliveroo said it would likely recommend the offer to shareholders, pending agreement on final terms.
According to a source cited by Reuters, the proposed deal is not expected to trigger regulatory concerns, as it would give DoorDash entry into 10 new markets where it currently has no presence. This could ease competition-related scrutiny compared to rival bidders with overlapping operations.
Deliveroo confirmed on Monday that the share buyback has been halted effective immediately, adding that any future resumption will be communicated to the market. No further information was provided.
DoorDash has until May 23 to submit a firm offer for Deliveroo under U.K. takeover rules.
According to Reuters, this was the first formal approach since reports of interest last summer.
Deliveroo shares have fallen nearly 50% since their 2021 IPO, as demand for food delivery cooled post-pandemic and investors turned their focus to more profitable businesses.
In March, Deliveroo exited the Hong Kong market, offloading parts of the business to Delivery Hero’s foodpanda. The Hong Kong unit had been operating at a loss and accounted for around 5% of total transaction value.