The takeover of Deliveroo by its US counterpart DoorDash is an illuminating example of the differing fortunes and attractions of US and UK stock markets.
DoorDash's offer for Deliveroo values the business at £2.9bn and will create a company with operations in more than 40 countries.
While both are similar companies, their fortunes have dramatically diverged over the past few years.
Both started out as food delivery services offering customers convenient and speedy access to their favourite restaurants and offering restaurants the ability to more fully utilise the capacity of their kitchens.
Both extended their offerings to include other convenience shopping items – like nappies, flowers and pet food.
Both raised money by selling shares to the public in an initial public offering (IPO) around the same time – Deliveroo on the London stock market, DoorDash on the New York Stock Exchange.
But when Deliveroo listed its shares in London, DoorDash was worth five times as much as its UK counterpart. Four years later DoorDash was worth 35 times as much.
This is not a perfect comparison as DoorDash has issued more shares to raise money to expand over time which would boost its total value – its market capitalisation. But the appetite for shares in the US company meant that it could successfully raise that money on US markets.
Let's look at another measure – the price of each share.
An investor who bought a share of DoorDash has seen its value rise 84%.
An investor who bought a share of Deliveroo has seen its value fall 56%.
What this means is that DoorDash is now in a position to use its greater financial heft to take over its UK rival – just as Deliveroo is finally turning a profit.
One of Deliveroo's first backers, Danny Rimer of Index Ventures, told the BBC in 2023 that if he had his time again he would have voted for a US listing, and people close to the company agree that the current takeover bid was partly enabled by DoorDash's access to US capital markets.
