DoorDash’s (DASH) stock climbed about 1% on Tuesday morning to reach $253 after the European Commission approved the American food delivery app’s $3.9 billion (£2.9 billion) takeover of London-based Deliveroo (GB:ROO). The update comes several weeks after the continental executive body stepped in to fast-track the acquisition process.
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DoorDash Joins Forces with Deliveroo
In May, DoorDash agreed to acquire Deliveroo after the British online food delivery company faced challenges with its stock performance following its 2021 debut on the London Stock Exchange.
Deliveroo operates as a multinational serving customers in several countries in Europe, including the United Kingdom, France, Belgium, and Ireland. This necessitated that the European Commission step in when the acquisition talks started.
However, the commission reviewed the deal under its simplified merger procedure. This is a faster approval track deployed by Brussels when a deal is perceived as unlikely to hurt competition in the market.
Deliveroo also operates outside Europe in countries such as the United Arab Emirates, Qatar, and Singapore. However, over the years, the company’s value has plummeted from about £7.6 billion at its IPO in 2021.
The company was hit hard after the surge in demand during the COVID-19 pandemic subsided, with people returning to dining out at restaurants. Competition from industry giants such as Uber Eats (UBER) and Just Eat Takeaway (JTKWY) also added to the pressure.
However, DoorDash believes joining forces with the British company can help it better compete in the food delivery market.
Is DASH a Good Stock to Buy Now?
Turning to Wall Street, DoorDash’s shares have a Strong Buy consensus recommendation on TipRanks based on assessments by 29 Wall Street analysts over the last three months. This recommendation is based on 22 Buy and seven Hold ratings.
The average DASH price target is $305.23, which points to a potential 21% upside.
