Deliveroo returns up to £250 million to shareholders with a takeover offer

Deliveroo plans to return up to £250 million to shareholders via a premium takeover offer starting on Friday.

The food delivery group, which first unveiled the plan to return excess capital to shareholders in August, said it planned to buy up to 217.4 million existing ordinary shares at 115p and 135p each.

Deliveroo shares rose sharply on Thursday, rising 8.88 percent, or 9.80 pence, to 120.10 pence in early trading, after rising over 36 percent in the last year.

Responsible: Will Shu is the managing director of Deliveroo

The tender offer, which closes on October 27, is subject to shareholder approval at a general meeting on October 16.

The offer prices represent premiums of 4.3 per cent and 22 per cent respectively compared to Wednesday’s closing price of 110.30p.

The price is a 3 percent discount compared to a 14 percent premium to the volume-weighted average price of its Class A shares over the past 90 days to this date.

The group said: “After receiving confirmation from Will Shu, the holder of all issued B ordinary shares, that he would not participate in the tender offer, the board has determined that only A ordinary shares are eligible for the offer pursuant to the offer Takeover offer.

“Each of the directors has confirmed that he or she does not intend to tender any of his or her individual shares of the Company’s A common shares as part of the tender offer.”

Deliveroo said it aims to return £300 million to shareholders in 2023, representing about 30 percent of its net cash at the start of the year.

Last month, Deliveroo raised its annual profit outlook after strong advertising revenue helped offset a decline in order volumes in the first half of the year.

The company expects adjusted underlying profit of between £60 million and £80 million this year, compared with a previous forecast of between £20 million and £50 million.

In the six months to June, the group’s losses narrowed 46 per cent to £82.9 million, although total orders fell 6 per cent to £145.2 million.

Revenues topped £1bn thanks to higher advertising revenue and the annualization of changes to the consumer fee structure.

In the UK and Ireland, sales rose 11 percent to £601.9 million, driven by the impact of food price inflation and increasing gross transaction value – the total value of orders placed on the platform.

However, Deliveroo’s international sales fell, partly due to weaker demand in France and despite the easing of pandemic-related restrictions across Asia.

Earlier this year, the group announced plans to cut around 350 jobs, primarily affecting employees based in the UK. Deliveroo said it expects the total number of workers made redundant to be “closer to 300” due to changes elsewhere in the company.