Delivery Hero owns a 5% stake in UK rival Deliveroo

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Berlin-based Delivery Hero Group has built a 5 per cent stake in Deliveroo, pushing shares in its UK-based rival to its highest point since its initial public offering in March.

The move comes at a time of consolidation in the online food delivery industry, as companies compete for a place in new sectors such as grocery stores and look to capitalize on the growth boost provided by pandemic shutdowns.

Shares in Deliveroo rose as much as 10 per cent to 360p on Monday morning in London, their highest point since the stock began trading in March.

Delivery Hero, whose stock was flat at €131.50, holds minority stakes in several other food delivery groups around the world, including Europe’s largest, Just Eat Takeaway.com, Spain-based Glovo, and Rabi in Latin America.

Delivery Hero competes with Deliveroo in the Middle East through its Talabat brand, and in Hong Kong and Singapore via its Foodpanda unit.

But the two companies do not overlap in Deliveroo’s biggest market, after Delivery Hero struck a deal in 2016 to sell its UK operation, Hungryhouse, to Just Eat for £200m.

The move left analysts initially confused. “It’s hard to say with conviction at this point what the intent of Delivery Hero is,” said Giles Thorne of Jefferies.

Deliveroo declined to comment. Delivery Hero said it is “always looking for new investment opportunities” and that it strongly believes in “the future potential of the delivery industry as a whole.” Both companies are set to update investors on current trading this week.

Deliveroo shares haven’t yet returned to the 390p price at which it launched its initial public offering, but the stock is now up more than 15 percent over the past month after upgrading to its growth forecast on July 8.

The dual-class stock structure that irritated some investors in the run-up to Deliveroo’s initial public offering means Will Shaw, chief executive, is able to block any takeover bid for the next three years.

Prosus, Delivery Hero’s biggest investor, increased its stake in the company to about 25 percent in March. Prosus, Naspers’ South African investment arm, has made significant investments in its food delivery business, including India’s Swiggy, Finnish Wolt, and the recently launched German grocery app Flink.

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