Shares of food delivery company Deliveroo rose more than 10% on Monday after announcing that enormous German rival Delivery Hero had purchased a 5.09 per cent interest in the company.
On Monday, the company’s stock rose from £3.36 ($4.66) per share to £3.60 per share in early trading on the London Stock Exchange, marking its highest level since trading began in March. Meanwhile, Delivery Hero’s shares stayed essentially flat on the Frankfurt Stock Exchange.
The market value of Deliveroo is over £8 billion. Thus Delivery Hero’s stake appears to be around £400 million. Deliveroo declined to comment on the specific magnitude of the investment, and Delivery Hero did not reply quickly to a request.
Deliveroo said in a message to investors that it received information of significant ownership in the company’s shares from Delivery Hero after the market close on 6 August 2021. Deliveroo was founded in 2013 by Will Shu and Greg Orlowski and had a $575 million funding round from Amazon in 2019. It lost £223.7 million on £4.1 billion in revenue in 2020, a significant decrease from the £317 million it lost on £2.5 billion in revenue in 2019.
Delivery Hero’s investment
Deliveroo went public in March, and while trading got off to a rocky start, the company’s share price has since recovered significantly.
The investment by Delivery Hero comes at a time when the food delivery sector is consolidating. Deliveroo, established in London, and Delivery Hero, located in Berlin, are two of Europe’s top food delivery companies. They’ve been competing for market share in countries across the continent and beyond for nearly a decade. With a market worth over 30 billion euros ($35 billion), Delivery Hero is far more significant than Deliveroo. Also, he owns minority holdings in food delivery companies such as Glovo, Just Eat Takeaway, Rappi, and Zomato. It competes with Deliveroo’s Talabat subsidiary in the Middle East and Foodpanda in Hong Kong and Singapore.
Deliveroo and Delivery
However, Deliveroo and Delivery Hero do not compete in the United Kingdom, which is Deliveroo’s primary market. That is because Delivery Hero sold its U.K. operations. Hungryhouse was acquired by Just Eat in 2016 for around £200 million.
Deliveroo and Delivery Hero, like UberEats and DoorDash, rely on a self-employed army of couriers to carry food from restaurant kitchens to people’s homes and offices in cities around the world in roughly 30 minutes.