Delivery Hero buys 5.1% stake in rival Deliveroo

Mon, 09 Aug, 2021 - 14:58

Germany-based Delivery Hero has taken a stake of almost 5.1% in online food delivery rival Deliveroo, driving the UK-based company's share price to its highest since listing on the stock market in March.

Shares in Deliveroo rose over 5%. "Delivery Hero is always looking for new investment opportunities," the German company said. "We strongly believe in the future potential of the delivery industry as a whole and therefore decided to purchase shares in one of the companies that is at its forefront," it said.

Online food platforms such as Delivery Hero, Deliveroo, Uber Eats and Just Eat have benefited from a surge in demand during pandemic lockdowns, but some analysts question how much of that business will persist as restaurants reopen. Despite a jump in sales Delivery Hero and Deliveroo continue to make losses.

A race into new markets and early moves towards consolidation has resulted in a number of cross-shareholdings. Founded in 2011, Delivery Hero operates in about 50 countries worldwide, with particular strength in Asia, where it owns the foodpanda brand. In many countries it offers quick commerce, using its riders to deliver groceries, pharmaceutical products and electronics. In May it announced its return to the German market, where it competes with Takeaway.com.

Delivery Hero does not operate in Britain — Deliveroo's largest market — after selling its Hungryhouse business to Just Eat in 2016. However, after later consolidation in Germany, it has a 7.4% stake in Just Eat and also owns 37% of Spain's Glovo, which is considering its own listing in about three years.