Deliveroo to return up to £250m to shareholders with tender offer

Deliveroo to return up to £250m to shareholders with tender offer

  • Deliveroo shares rose by over 8% on Thursday; up over 36% in a year  

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

The food delivery group, which first outlined the plan to return the surplus capital to shareholders in August, said it plans to buy up to 217.4million existing ordinary shares for between 115p and 135p each. 

Deliveroo shares rose sharply on Thursday and were up 8.88 per cent or 9.80p to 120.10p in early trading, having risen over 36 per cent in the last year.  

In charge: Will Shu is the chief executive of Deliveroo

The tender offer, which closes on 27 October, is conditional upon shareholder approval at a general meeting being held on 16 October. 

The tender prices represent premiums of 4.3 per cent and 22 per cent, respectively, compared with its closing price of 110.30p on Wednesday. 

The price is a discount of 3 per cent compared to a premium of 14 per cent to the volume-weighted average price of its class A shares over the last 90 days through to that date. 

The group said: ‘Having received confirmation from Will Shu, the holder of all of the issued B Ordinary Shares, that he would not participate in the Tender Offer, the Board has determined that only A Ordinary Shares will be eligible for tender pursuant to the Tender Offer. 

‘Each of the Directors has confirmed that he or she does not intend to tender through the Tender Offer any of his or her individual holdings of A Ordinary Shares of the Company.’

Deliveroo said it intends to return £300million to shareholders in 2023, equal to about 30 per cent of its net cash at the beginning of the year.

Last month, Deliveroo raised its annual earnings outlook after strong advertising income helped offset a fall in order volumes in the first half.

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

For the six months ending June, the group’s losses narrowed by 46 per cent to £82.9million despite total orders falling by 6 per cent to 145.2million.

Revenues surpassed the £1billion mark thanks to higher advertising income and the annualisation of changes to its consumer fee structure.

In the UK and Ireland, turnover grew by 11 per cent to £601.9million, which it credited to the effects of food price inflation and rising gross transaction value – the overall value of orders made on its platform.

But Deliveroo’s international revenues dipped lower, partly because of weaker demand in France and despite the easing of pandemic-related restrictions across Asia.

Earlier this year the group announced plans to cut about 350 roles, predominantly affecting UK-based employees. Deliveroo said it expected the total number of workers made redundant to be ‘closer to 300’ due to redeployments elsewhere in the business.