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Deliveroo shares jump as German rival Delivery Hero takes 5% stake

Deliveroo shares jump to highest level since its float as German rival Delivery Hero takes a 5% bite

  • Deliveroo shares rose to their highest level since its stock market debut in March
  • Shares were up 8.5% to 352p in morning trading on Monday
  • Berlin-based Delivery Hero also owns a 7.4% stake in Just Eat

Deliveroo shares jumped this morning after it revealed that German rival Delivery Hero has taken a 5.09 per cent bite of the online food delivery company.

The stock lifted as much as 10 per cent in early trading to its highest level since the company floated on the London stock exchange at the end of March, at a price of 390p.

Deliveroo shares were up 8 per cent to 351p at lunchtime today. 

Berlin-based Delivery Hero took a 5.09% stake in Deliveroo

Delivery Hero said they ‘strongly’ believed in Deliveroo’s future potential.

‘We can confirm that Delivery Hero has taken a 5.09 per cent stake in Deliveroo,’ the company said. 

‘Delivery Hero is always looking for new investment opportunities. 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.’

Like other food delivery companies, Deliveroo has benefited from rising demand for home-delivered meals during the pandemic lockdowns, with the company posting an 88 per cent rise in orders in the second quarter. 

However, its float on the London stock market has been widely touted as a flop after its share price plunged more than 30 per cent on its debut as investors worried over the company’s business model and status of its riders. 

At the end of June, Deliveroo won the latest showdown in the long-running legal battle with trade union Independent Workers Union of Great Britain about the status of its riders.

Senior judges ruled its ‘roos’ can be classed as self-employed contractors rather than ‘workers’ – meaning the company need not provide them with the same rights as staff such as sick pay and annual leave. 

Today’s stake acquisition by Delivery Hero comes amid a growing number of cross-shareholdings in the sector of late.

Berlin-based Delivery Hero, which was founded in 2011, does not operate in Britain after selling its Hungryhouse business to Just Eat in 2016.

However, it owns a 7.4 per cent stake in Just Eat

The company also owns a 37 per cent stake in Spain’s Glovo, which is considering its own listing in about three years.  

It has operations in about 50 countries worldwide, with a focus on Asia, where it owns online food and grocery delivery platform foodpanda.   

Deliveroo publishes its first-half results on Wednesday, with analysts expecting it to post higher revenues. 

Michael Hewson, chief market analyst at CMC Markets UK, said: ‘Full year revenues are estimated to rise by 53 per cent from 2020 levels of £1.2billion, to £1.8billion so any sort of number close to a £1billion for H1 is likely to be well received.’ 

Up and downs: Deliveroo shares plummeted on its stock market debut but have since recovered - although they remain below their IPO price of 390p

Up and downs: Deliveroo shares plummeted on its stock market debut but have since recovered – although they remain below their IPO price of 390p