It’s not every day that a homegrown tech name like Deliveroo gets scooped up for nearly £3bn. But that’s exactly what happened earlier this month when American delivery giant DoorDash made its move. The £2.9bn takeover deal didn’t just send Deliveroo’s share price soaring, it also sent a strong message about UK shares: international investors are still very much interested.
After years of Brexit blues, global inflation jitters and lingering scepticism about London-listed firms, the acquisition proves that British businesses can still command hefty price tags. DoorDash clearly saw value where others hadn’t — a sign that UK shares may be unfairly undervalued by the market.
Solid market position
Like many recent start-ups, Deliveroo faced its fair share of competition and criticism. Choosing to launch an IPO mid-pandemic was a risky move and the company endured everything from regulatory headwinds to margin pressures. Yet through it all, it managed to secure a dominant market position. Despite some forays into mainland Europe, the UK and Ireland remain its core markets, accounting for nearly 60% of total revenue.
That’s the presence DoorDash wanted — and was willing to pay handsomely for. The question now is: could this deal set off a domino effect? If a mid-cap tech player like Deliveroo can attract this level of interest, who might be next?
Takeover targets
UK shares — especially in the tech, fintech and consumer sectors — may start to look increasingly attractive to global buyers. Our stable regulatory environment hosts a large selection of financially sound yet undervalued companies. And let’s not forget the deep talent pools and established infrastructure that come with operating in the UK market.
Big brands like ITV and Wise (LSE: WISE) have already been named as potential acquisition targets. Meanwhile, trailblazers like Ocado, which blends retail with automation technology, could find themselves in the crosshairs as the market continues to heat up.
The rising neo-bank
Wise began life as a cross-border payments solution before morphing into a fully-fledged neo-bank. It remains a standout among UK shares for its rapid growth and disruptive model.
Since going public in July 2021, revenue’s tripled and its net margin’s surged from below 6% to 23%. In 2023, the company enjoyed an outstanding year, with earnings per share (EPS) soaring to 34p per share — a threefold increase from 2022.
With over £118bn moved annually and a loyal customer base, it boasts strong margins, recurring revenue and scalability. Its direct-to-consumer focus and low-cost transfers make it attractive to global financial institutions or tech giants seeking a foothold in European fintech.
Yet risks remain. Regulatory scrutiny over anti-money laundering compliance has intensified, not to mention macroeconomic shifts like interest rate changes and FX volatility. On top of that, its not very cheap compared to earnings, which could deter potential investors — especially if growth slows.
The grass is always greener…
With the UK fintech sector in focus and recent buying activity heating up, Wise’s unique position could make it a future acquisition target — at the right price.
Personally, as a Wise customer, I hope it stays put. I prefer my bank being locally listed. What’s more, as an investor, I think it’s a solid stock to consider — even if it doesn’t end up a takeover target.
