A Deliveroo driver
(Picture: REUTERS)Poor old Deliveroo - another week, another new low for the share price.
The stock reached a quid earlier this week after what looked on the surface like a decent trading update. Investors are fretting about shrinking order sizes even as sales rise.
The latest slump leaves Deliveroo valued at £2bn. Could it be a takeover target? The list of potential buyers is small.
Amazon, Deliveroo’s biggest investor, only managed to increase its stake last time out by convincing the competition watchdog the company would collapse without a cash injection. Any attempt to buy it outright would face an immediate roadblock.
Rivals JustEat and Uber would encounter similar monopoly concerns if they fancied a bid.
Germany’s Delivery Hero already owns 5% of Deliveroo but would be “crucified” by the market if launched a takeover, says one City scribbler who follows the space. Losses have been consistently higher than expected, leaving investors with little sympathy for any major M&A.
Who else is there? US operator DoorDash could be interested as a way into the UK market. Then there’s Prosus, the Dutch listed tech investment fund that backs high-growth companies. It has a keen interest in the space, with non-controlling stakes in Delivery Hero and Brazil’s iFood. There is no overlap with these businesses, meaning competition wouldn’t be a concern.
But the biggest blocker to any takeover is Will Shu, Deliveroo’s boss and founder. He has a controlling share that allows him to block any takeover - and a bee in his bonnet to prove his City doubters wrong. Selling up would give him an easier life on paper but almost certainly leave him unsatisfied. He prefers the hard yards to cocktails at lunch.
That may be cold comfort for the thousands of retail investors who have already done plenty of hard yards after buying into the IPO at £3.90 a share.
