Deliveroo has hit its highest share price since it went public in March after it revealed that rival German service Delivery Hero had taken a 5% stake.
Shares in the London-listed food delivery company rose as much as 10% to 360p in early trading Monday after announcing the news.
Deliveroo has had a difficult few months as a publicly traded company, since its shares fell more than a quarter in the company’s debut, when they were priced at 390 pence.
Equity analysts at broker Jefferies said it was “difficult to say with conviction at this point what Delivery Hero’s intent is” with its stake in Deliveroo.
Berlin-based Delivery Hero was founded in 2011 and has been listed on the Frankfurt Stock Exchange since 2017, where it currently has a market value of almost € 33 billion (£ 28 billion), more than four times higher. to Deliveroo. Delivery Hero operates in more than 50 countries, in Europe, Central and South America, the Middle East and Asia, where it is particularly strong, thanks to its foodpanda brand.
However, the two companies do not compete in the UK as Delivery Hero does not operate in Deliveroo’s larger market. The German firm sold Hungry House to Just Eat in 2016.
Demand for food delivery services from Deliveroo and rivals like Uber Eats and Just Eat Takeaway soared during the coronavirus pandemic, when closure restrictions closed cafes and restaurants for long periods of time.
Yet analysts wonder how the sector will fare after the hospitality reopens and as established players struggle to expand into new markets.
Jefferies analysts said they believed the food delivery sector was entering what it called the “fourth age” after bursts of consolidation in the market.
They added: “The profile of an operator positioned to do well is one with delivery in their DNA, an aggressive and progressive attitude to take advantage of delivery and a first mover advantage in the grocery market, preferably on the model of dark shop “.
Takeout services are also facing competition from a number of fast grocery delivery startups, such as Getir, Dija, Weezy and Gorillas, promising supplies to arrive in 10-20 minutes.
Many choose their food from “dark stores”, small local distribution centers, which are like corner stores but which consumers cannot enter.