DoorDash surges on $8 bln takeover deal to jump start international expansion

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Nov 10 (Businesshala) – Shares of DoorDash Inc rose on Wednesday after the US food delivery firm struck an $8 billion deal to buy Finnish startup Volt to grab a slice of the European market and maintain its fast pace of growth. There was a jump of 16%.

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The deal will help DoorDash enter 22 new markets, including Germany, Denmark and Sweden, while potentially serving around 700 million customers.

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“(The move) begins international expansion,” said BTIG analyst Jake Fuller, “if it weren’t for the acquisition, DoorDash would have taken longer to reach international markets through an “organic build-out.”

At least eight brokerage firms appreciated the deal by raising their price targets on the stock. Analysts at Evercore said a challenge for DoorDash prior to the deal was the lack of an international presence.

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This acquisition is expected to help DoorDash maintain its growth momentum seen during the pandemic. According to Refinitiv data, analysts are forecasting a 65% jump in revenue this year.

“This partnership is really about acceleration and expansion, to play for the big prize on an even bigger global stage,” DoorDash CEO Tony Xu said on a conference call Tuesday.

Through the all-stock deal, Vault — which made its first delivery in 2015 in Helsinki, Finland — will be valued at nearly three times its estimated gross order value of $2.5 billion.

“(the deal) speaks volumes that DoorDash will buy a sector challenger at a one-third valuation rather than its own trading multiple,” said analysts at Jefferies.

DoorDash shares, which have nearly doubled since its initial public offering in December, were trading at $223.50 before the bell.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D’Silva

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