Deliveroo shares rally 10% after Delivery Hero buys minor stake

• Deliveroo shares spiked up 10% on Monday morning (09 August 2021) to 358 pence
• German rival Delivery Hero has reportedly acquired a 5.09% stake in the UK platform
• The Deliveroo stock is still down by some 8% since its initial public offering (IPO) in March 2021
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Deliveroo stock price: what’s the latest?

Shares of UK food delivery platform Deliveroo jumped up nearly 10% on Monday morning, after it was reported that German rival Delivery Hero acquired a 5.09% stake in the company.

The Berlin-based Delivery Hero now owns 87.4 million of Deliveroo shares worth a total of £284.1 billion, based on Deliveroo’s closing share price of 325.10 pence last Friday.

Deliveroo shares opened at 336.30 pence on Monday, before rising to 358.30 pence later in the session.

Meanwhile, Delivery Hero shares, which are traded on the Frankfurt Stock Exchange, fell over 1% following the report.

Delivery Hero also owns minority stakes in other food delivery players internationally, including Europe’s largest platform Just Eat Takeaway.com.

Both Deliveroo and Delivery Hero compete directly in the Middle East through the latter’s Talabat brand, and in Hong Kong and Singapore via the Foodpanda app, but not in the UK - Deliveroo’s largest market.

Delivery Hero sold its UK operations, Hungryhouse, in 2016 to Just Eat.

Jefferies analyst Giles Thorne told The Financial Times 'it is hard to say with conviction at this point what Delivery Hero’s intention is’ behind this latest minor stake take-up.

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Deliveroo’s IPO was ‘one of the most disastrous in memory’

The Deliveroo stock is still down by some 8% since its debut on the London Stock Exchange in March this year at a launch price of 390 pence per share.

Deliveroo’s flotation was one of the most anticipated IPOs on the LSE in years, but its share price quick collapse to under 250 pence less than a month later gave it the reputation of being ‘one of the most disastrous IPOs in memory’.

According to Fraser Thorne, CEO of The Edison Group, ‘the warning signs were there’, adding that it has become ‘a case study of how not to do an IPO’.

Nevertheless, Deliveroo shares have climbed up about 15% in the last one month, thanks to a growth forecast upgrade on 08 July.