As Bloomberg announces negotiations for Uber to buy Deliveroo, shares of other food delivery firms fall

In late September Bloomberg reported that ride-hailing giant, Uber Technologies, is in talks to purchase Deliveroo, a food delivery company.

Deliveroo, which is based in London, was valued at at more than S $2.73 billion (US $2 billion) in 2017, when the company had raised US $480 million from private investors.

Bloomberg has reported that the offer from Uber would be higher than last year’s valuation, though the exact amount is still undisclosed. Experts speculate that the deal could cost Uber several billion dollars.

The purchase would establish Uber’s dominance in the food delivery niche in Europe.

However, there is a possibility that the purchase will fall through, since the food delivery company, along with its investors, seem unenthusiastic about giving up their independence.

Deliveroo announced in July that while an IPO (initial public offering) was not out of the question, the company would not do it hastily.

The company started five years ago in London, and quickly expanded into 11 other countries, though it is not well-well-known in the United States. The service is now available in 200 cities over 4 continents, with other markets are following suit.

Neither Deliveroo nor Uber has chosen to comment as yet.

The day after Bloomberg’s report broke, shares for competitor food delivery companies fell. In Frankfurt, Delivery Hero dropped by 2.9 percent, but rebounded by day’s end. In London, Just Eat Plc fell by 9 percent.

Dara Khosrowshahi, Uber’s Chief Executive Officer, made it clear that the company’s food delivery service is its top priority at the moment.  At the same time, the company is also in negotiations with Careem, a ride-sharing company in the Middle East.

After Uber sold its business to China, Russia and South East Asia, the San Francisco based company has shown more interest in acquiring its rivals rather than selling its businesses.

Deliveroo is currently one of the largest startups in Europe. Should Uber acquire the company, it will be just the latest Middle Eastern or European company to be bought by foreigners.

Since 2016, Apple has bought Shazam for $400 million. Amazon bought online retailer souq.com, based in Dubai, for $580 million. Skyscanner, a Scottish flight-booking site, was acquired by Chinese company Ctrip.com International Ltd, for $1.7 billion.