Delivery Hero exits stake in Deliveroo in deal valued at up to £82M

Delivery Hero exits its stake in Deliveroo, placing 68 million shares at £1.13 each. According to the company, the move is a demonstration of its "commitment to disciplined capital allocation".
Delivery Hero exits stake in Deliveroo in deal valued at up to £82M

Berlin-based food delivery company Delivery Hero is exiting its stake in rival Deliveroo in a move the company cites as a “commitment to disciplined capital allocation”.

As per a statement released by the company late Tuesday evening, Delivery Hero successfully placed approximately 68 million shares in Deliveroo at a price of £1.13 per share. 

Deliveroo was trading at £1.21 per share as of Tuesday’s LSE closing bell equating to a price of £82,280,000. The placement of Delivery Hero’s 68 million shares represents 4.5 per cent of Deliveroo’s total outstanding shares.

The placement is expected to settle on the 1st of February.

Delivery Hero acquired a 5 per cent stake in Deliveroo in mid-2021, i.e. at the height of the pandemic-fueled market demand for food delivery services, in a deal valued at approximately £284 million.

However, as we’ve seen with other players in the food delivery sector, the market is awash with consolidation and cost-cutting. 

In mid-December Delivery Hero announced the shuttering of tech hubs in Türkiye and Taiwan and a 13 per cent reduction in headcount at its Berlin headquarters.

Similarly, reports surfaced in late Q3 of 2023 that tangential player Getir, once valued at $11.8 billion, was looking to raise $500 million at a dramatically reduced valuation of $2.5 billion.

The risks and costs associated with rapid expansion and a post-pandemic spike in food prices are pushing a sector already operating on razor-thin profit margins to the brink. 

Add in Delivery Hero and its Spanish business Glovo’s EU antitrust investigations regarding hiring practices and information sharing, and a perfect storm may be just over the horizon.

Lead image via Deliveroo. Photo: Uncredited.

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