DoorDash to enter European market with $8 billion deal for Wolt

A DoorDash sign is pictured on a restaurant on the day they hold their IPO

(Reuters) -DoorDash Inc said on Tuesday it would buy Finland-based rival Wolt Enterprises OY in an all-stock deal valued at about 7 billion euros ($8.09 billion), as the biggest U.S. food delivery expands into Europe.

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Demand for services offered by DoorDash and rivals boomed during the pandemic. That lofty growth rates are likely to ease as more people step out, setting off a wave of consolidation in the sector.

DoorDash’s shares rose 8% in after-market trading on the acquisition that helps the company enter 22 additional markets, including Germany, Serbia, Croatia, Denmark and Sweden, as well as a beat on third-quarter revenue.

Wolt, since its first delivery in Helsinki, Finland, in 2015, has grown to expand in Europe and Asia and has over 30,000 restaurant and retail partners.

“Joining forces with Wolt will … allow us to accelerate our international growth, while elevating our focus on the U.S.,” DoorDash Chief Executive Tony Xu said in a statement.

U.S.-based Grubhub Inc’s acquisition by Dutch company Just Eat and Uber Inc’s purchase of Postmates Inc are among some other big deals in the delivery business.

Wolt and DoorDash said they expect combined adjusted core earnings to be between breakeven and $500 million in 2022, with the deal expected to close in the first half of next year.

Wolt Chief Executive Miki Kuusi will run DoorDash’s international division, reporting to Tony Xu.

DoorDash equity issued as part of the deal will be valued at $206.45 per share, the companies said.

Separately, DoorDash said its third-quarter revenue rose 45% to $1.28 billion, topping estimates of $1.18 billion, according to Refinitiv IBES.

The company however, reported a per-share loss of 30 cents, while analysts had expected a 26-cent loss.

($1 = 0.8655 euros)

(Reporting by Praveen Paramasivam and Nivedita Balu in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila)