The acquisition deal did not go well with Square’s investors as its stock fell to 9% in extended trading.
Competition among major food delivery apps is heating up.
DoorDash, a big name among food delivery service providers has acquired its San-Francisco based food delivery rival Caviar. The acquisition deal is said to be consists of a mix of cash and DoorDash Stock.
Caviar, a food delivery platform is reportedly being sold by its parent company Square for $410 million to DoorDash. In 2014, Square, a mobile payment company founded by Jack Dorsey initially purchased the Caviar for a $90 million.
We’re thrilled to welcome Caviar to the family, and to work together towards our shared vision of empowering local economies. https://t.co/MGCGYdVhvT — DoorDash (@DoorDash) August 1, 2019
With door delivery food platform, DoorDash joining Caviar, its head Gokul Rajaram and rest of the Caviar employees will unite with DoorDash team after finalising the acquisition agreement. The purchase deal is expected to close later this year.
DoorDash co-founder and CEO Tony Xu stated,
“Today’s announcement is another important step forward on our mission to empower local economies. We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology."
He further added,
“The acquisition further enhances the breadth of our merchant selection, enabling us to offer customers even more choices when they order through DoorDash. We look forward to welcoming the Caviar team to DoorDash and expanding our partnership with Square in the future.”
Launched in 2013, Caviar planned to do something different from other best food delivery apps like GrubHub and rather focusing on budget restaurants and fast-food chains, it put its attention on premium restaurants. Interestingly it was also one of the first food delivery apps to appoint its own food messengers instead of relying on the restaurant’s delivery man.
Gokul Rajaram stated,
“Caviar has built a trusted brand with customers and many of the best restaurants. DoorDash has national scale, complementary restaurant selection, a tremendous logistics platform, and a team that shares our passion and commitment to better serve restaurants, couriers, and customers. I’m incredibly excited to be joining, with the rest of the Caviar team, to help build the future of local commerce.”
However, the acquisition deal did not impress the Square’s investors much. After the announcement of DoorDash acquiring Caviar, the stock of Square fell to 9% in extended trading. During the earnings call, Square founder’s Jack Dorsey said,
"We have seen a lot of opportunities to strengthen both these ecosystems but those opportunities require more focus and more investment. To increase our focus, we decided to sell our Caviar business to DoorDash."
Square has also attempted to sell the Caviar previously. In 2016, it offered the food delivery app, Caviar to Uber, yelp, and GrubHub. But at that time the price tag of $100 million did not interest anyone that much.
Square stated in its Q2 shareholder letter,
“This transaction allows us to increase our focus on and investment in our two large, growing ecosystems—one for businesses and one for individuals. It creates clarity in how we operate and a clearer purpose and alignment for our planning, investment, and work moving forward.”
Even before the acquisition of Caviar, DoorDash was planning to cement its place as the biggest food delivery platform. As per Analytics firm, Second Measure, DoorDash recorded 34% of all U.S. meal delivery sales.
This year, also DoorDash is quite active in raising the funds to expand its business. In the start of this year, it raised $400 million and in May, it went up to more bigger funding, raising $600 million in Series G round.
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