DoorDash Reaches $ 8 Billion Buyback Agreement to Launch International Expansion
Nov. 10 (Reuters) – Shares of DoorDash Inc (DASH.N) jumped 16% on Wednesday after the U.S. food delivery company signed an $ 8 billion deal to buy Finnish startup Wolt in order to seize a share of the European market and maintain its frantic pace of growth.
The deal will help DoorDash enter 22 new markets, including Germany, Denmark and Sweden, while potentially serving around 700 million customers.
“(The move) kicks off international expansion,” said BTIG analyst Jake Fuller, adding that if it had not been for the acquisition, it would have taken DoorDash much longer to reach the markets. international thanks to “organic construction”.
At least eight brokerage firms have applauded the deal by raising their share price targets. Evercore analysts said a challenge for DoorDash before the deal was its lack of an international presence.
The buyout is expected to help DoorDash maintain its growth momentum seen during the pandemic. Analysts estimate a 65% increase in revenue this year, according to data from Refinitiv.
“This partnership is really about acceleration and expansion, to play for a bigger price on an even bigger global stage,” DoorDash CEO Tony Xu said on a conference call Tuesday.
With the all-stock deal, Wolt – which made its first delivery to Helsinki, Finland in 2015 – would be valued at around three times its expected gross order value of $ 2.5 billion.
“(The deal) speaks volumes that DoorDash would rather buy a sector challenger for more than its own trading multiple rather than acquire incumbents at one-third of the valuation,” analysts at Jefferies said.
DoorDash shares, which have nearly doubled since their IPO in December, were trading at $ 223.50 before the bell.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D’Silva
Our Standards: Thomson Reuters Trust Principles.