Deliveroo shares rise after German rival takes stake in company

A Deliveroo courier drives along Regent Street delivering take-out food in central London during Covid-19 level 4 restrictions.

Pietro Recchia | SOPA Pictures | LightRocket via Getty Images

LONDON – Shares of food delivery company Deliveroo climbed more than 10% on Monday after the company announced that big German rival Delivery Hero had taken a 5.09% stake in the company.

Shares of the company fell from £ 3.36 ($ 4.66) per share to £ 3.60 per share in the first trades on the London Stock Exchange on Monday, reaching their highest level since trading began in March . Meanwhile, Delivery Hero’s shares have remained relatively stable on the Frankfurt Stock Exchange.

The market value of Deliveroo is around £ 8bn, so Delivery Hero’s investment appears to be around £ 400m. Deliveroo declined to comment on the exact size of the investment, while Delivery Hero did not immediately respond to a request for comment from CNBC.

In a note to investors, Deliveroo said it had received a notification “of significant holdings in shares of Delivery Hero’s company after market close on August 6, 2021”.

Founded in 2013 by Will Shu and Greg Orlowski, Deliveroo received a boost from Amazon in 2019 when the e-commerce giant led a $ 575 million funding round in the business.

It recorded a loss of £ 223.7million on revenue of £ 4.1bn in 2020, which is significantly lower than the £ 317million lost out of £ 2.5bn of revenue in 2019.

Deliveroo went public in March, and although trading got off to a chaotic start, the company’s stock price has recovered somewhat since then.

Delivery Hero’s investment comes amid a period of consolidation in the food delivery market.

London-based Deliveroo and Berlin-based Delivery Hero are two of the largest food delivery companies in Europe and have been battling for market share in countries on the continent and beyond for almost a decade. .

Delivery Hero, which is considerably larger than Deliveroo with a market cap of around 30 billion euros ($ 35 billion), also has minority stakes in food delivery companies including Glovo, Just Eat Takeaway, Rappi and Zomato.

It competes with Deliveroo in the Middle East through its Talabat business, and in Hong Kong and Singapore through its Foodpanda division.

Deliveroo and Delivery Hero, however, do not compete in the UK, which is Deliveroo’s main market. Indeed, Delivery Hero sold his UK business, Hungryhouse, to Just Eat in 2016 for around £ 200million.

Like UberEats and DoorDash, Deliveroo and Delivery Hero rely on an army of independent couriers to deliver food from restaurant kitchens to people’s homes and offices in cities around the world in about 30 minutes, reducing every order to during the process.

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