FILE PHOTO: A DoorDash sign is pictured on a restaurant on the day they hold their IPO in the Manhattan borough of New York City, New York, U.S., December 9, 2020. REUTERS/Carlo Allegri
November 10, 2021
By Praveen Paramasivam
(Reuters) – DoorDash Inc said on Tuesday it would buy Finland-based rival Wolt Enterprises OY in an all-stock deal valued at about 7 billion euros ($8.09 billion), as the biggest U.S. food delivery firm expands into Europe.
A pandemic-driven boom in demand for services offered by DoorDash and rivals is expected to ease in the coming months, but with most companies still losing money while seeking scale, the stage is set for a wave of consolidation.
DoorDash’s deal would be one of the biggest yet in the space following Just Eat Takeaway.com $7.3 billion acquisition of American rival Grubhub and Uber Inc’s $2.65 billion deal for Postmates Inc last year.
DoorDash’s shares surged nearly 19% in after-market trading on the acquisition that helps the company enter 22 additional markets, including Germany, Serbia, Croatia, Denmark and Sweden, as well as a beat on third-quarter revenue.
Analysts have said DoorDash had been gearing up to launch in Germany and Mexico for some time now.
Wolt, since its first delivery in Helsinki, Finland, in 2015, has grown to expand in Europe and Asia and has over 30,000 restaurant and retail partners.
The company had more than 2.5 million monthly active users, as of Sept. 30, while DoorDash exited third quarter with over 9 million members using its subscription service.
“Joining forces with Wolt will … allow us to accelerate our international growth, while elevating our focus on the U.S.,” DoorDash Chief Executive Tony Xu said in a statement.
The deal would allow DoorDash “to play for a bigger prize on an even larger global stage”, he said on an earnings call.
Wolt and DoorDash said they expect combined adjusted core earnings to be between breakeven and $500 million in 2022, with the deal expected to close in the first half of next year.
Nearly two-thirds of Wolt’s gross order value, a metric totaling value of all orders and subscription fees, brings in positive contribution profit, DoorDash said, adding it would not share further details.
DoorDash equity issued as part of the deal will be valued at $206.45 per share, the companies said.
Separately, DoorDash said third-quarter revenue rose 45% to $1.28 billion, topping estimates of $1.18 billion, according to Refinitiv IBES.
($1 = 0.8655 euros)
(This story refiles to add dropped word in first paragraph)
(Reporting by Praveen Paramasivam and Nivedita Balu in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila)