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Deliveroo stock hits post-IPO high as rival Delivery Hero buys stake

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·Senior City Correspondent, Yahoo Finance UK
·2 min read
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REGENT STREET, LONDON, UNITED KINGDOM - 2021/03/31: Deliveroo courier rides along Regent Street delivering Takeaway food  in central London. (Photo by Pietro Recchia/SOPA Images/LightRocket via Getty Images)
Deliveroo courier rides along Regent Street delivering Takeaway food in central London. Photo: Pietro Recchia/SOPA Images/LightRocket via Getty Images

Shares in embattled takeaway app Deliveroo (ROO.L) rallied on Monday after rival Delivery Hero (DHER.DE) disclosed a 5% stake in the business.

A stock market filing published on Monday morning showed Berlin-based Delivery Hero had bought a 5% stake in Deliveroo. The news sent Deliveroo's stock price up 8% to 350p.

Deliveroo's stock popped on news of Delivery Hero's stake. Photo: Yahoo Finance UK
Deliveroo's stock popped on news of Delivery Hero's stake. Photo: Yahoo Finance UK

Delivery Hero runs takeaway delivery businesses across Europe, Asia, Latin America, and the Middle East. It formerly operated the Hungry House brand in the UK before selling the franchise to local operator Just Eat Takeaway.com (JET.L) in 2017.

Delivery Hero's founder Niklas Oestberg said on Twitter that he had known Deliveroo founder Will Shu for "many years" and had "huge respect" for his business. Oestberg said Delivery Hero purchased the stake in Deliveroo because the business was "undervalued" after being "oversold at IPO."

Deliveroo suffered a disastrous public market debut earlier this year, with shares slumping 30% on the first day of trade. Monday's rally propelled Deliveroo's stock to the highest level seen since its IPO in March, when shares were offered to investors at 390p.

Shares reached their highest level since March's IPO. Photo: Yahoo Finance UK
Shares reached their highest level since March's IPO. Photo: Yahoo Finance UK

Deliveroo's poor float was blamed on bad timing, concerns about regulation of the gig economy, and investors concerns about founder Shu's decision to opt for a dual class listing structure, which gave him continued complete control of the business after listing.

Delivery Hero investors were not as impressed. The stock slipped 1.8% in Germany. Delivery Hero was founded in 2011 and has been listed in Frankfurt since 2017. It is currently valued at €32bn, compared to Deliveroo's market cap of £6bn.

Deliveroo has been approached for comment.

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