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Deliveroo shares slip as rival Delivery Hero plans to sell stake

Food delivery firm Deliveroo has seen shares fall after a rival sold its stake in the business (David Davies/PA)
Food delivery firm Deliveroo has seen shares fall after a rival sold its stake in the business (David Davies/PA)

German takeaway delivery platform Delivery Hero is selling its stake in Deliveroo, amid a continued slowdown in the sector.

Shares in Deliveroo slipped on Tuesday morning as a result.

Late on Monday, Berlin-based Delivery Hero revealed plans to sell up to 68.2 million shares in Deliveroo, representing a roughly 4.5% stake.

It said the move, which could be worth around £83 million based on the firm’s closing price on Monday, will wipe out its investment in the UK delivery company.

Deliveroo has been contacted for comment.

Delivery Hero first purchased the stake in its rival in August 2021 as demand in the sector continued to benefit from pandemic-era trends.

However, rapid delivery firms have come under pressure more recently as consumers have returned to restaurants, pubs and shops.

The share sale comes almost two months before Deliveroo founder and chief executive officer Will Shu’s dual-class shares are set to expire.

This share structure provides Mr Shu with extra voting powers and the ability to block a hostile takeover.

Some industry analysts have suggested the company could be targeted for a takeover once this structure expires.

Analysts at Shore Capital said: “A large part of the European food delivery market debate has been around consolidation, with the key catalyst for Deliveroo being April, when its CEO’s golden shares expire.

“We have argued for some time that M&A (merger and acquisition) risk has been helpful in-part to the valuation multiple premium versus peers.

“Delivery Hero, in our view, was one of the more plausible potential acquirers of Deliveroo, despite their balance sheet headaches, so them selling down takes a key horse out of the race and is a slight blow to the bull case.”

Shares in Deliveroo were 4.3% lower on Tuesday morning.