Deliveroo shares soar as German rival sparks speculative takeover

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A £300m stake in Deliveroo has been taken over by a German competitor, sending shares of the takeaway app to their highest level since the company’s disastrous stock market floatation amid hopes it is being dragged into a wave of industrial deal-making.

Shares in Deliveroo rose as much as 11 per cent after the company revealed that a 5.09 per cent stake had been built by Delivery Hero, a £27 billion competitor headquartered in Berlin.

The stock closed at 339.8 pence, up 4.5% — the first time the shares had exceeded the 331 pence valued when trading opened on March 31. And it’s still well below the 390 pence price early investors paid during the disastrous Deliveroo float.

Niklas Ostberg, Delivery Hero CEO, said he invested in the company because it was “undervalued” and “oversold in the IPO.”

While a takeover offer is not thought to be on the horizon, the German company’s stake raises the possibility that Deliveroo will be a takeover target in the food delivery industry that has thrived during the pandemic.

One Deliveroo investor said Delivery Hero’s investment is a welcome sign and that industry consolidation is inevitable, adding “there has to be a backlog” in the industry.

DoorDash, America’s largest food delivery company, is in talks to invest in German grocery delivery startup Gorillas. Meanwhile, Uber has bought US rival Postmates and Amsterdam-based Just Eat Takeaway has completed a $7.3bn (£5.3bn) takeover of Grubhub.

Oestberg noted that Delivery Hero — which operates in about 50 countries across four continents — has invested opportunistically, sensing a deal after Deliveroo shares crashed by more than a third of their flotation price.

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