SHARES in Deliveroo jumped yesterday after reports that US rival Doordash had approached the fast food delivery giant about a possible takeover.

Reuters reported that Doordash and Deliveroo held talks last month, but the possible deal ended over a disagreement on valuation. No talks are ongoing, according to the report.

Deliveroo declined to comment, but the firm's shares rose over seven per cent yesterday morning following the news. Its share price eventually dropped to close up 1.18 per cent.

Rumours also swirled in 2022 that DoorDash was mulling a takeover of Deliveroo.

While Deliveroo may not have agreed to a deal on this occasion, analysts at Jefferies said the approach "may only be the start".

The analysts said the talks "validate what we have been arguing" since December, that a "large gap in US vs. Europe trading multiples will be a catalyst for the return of cross-border M&A in online food delivery in 2024".

It also said the talks show "Deliveroo's quality of market positions, strategy, execution and balance sheet", which make it such a highly-sought after target.

"In this instance, the talks have failed. But such is the strength of the financial, industrial and strategic logic of a Deliveroo takeover, we would not be surprised to see similar such headlines to re-emerge in the short term."

Jefferies said: "In our view, the key to unlocking a recommended offer from Deliveroo is understanding the sensibilities of the Founder CEO, Will Shu. This may only be the start."

(c) 2024 City A.M., source Newspaper