Deliveroo has hit its highest share price since it floated on the stock market in March, after it disclosed that the German rival service Delivery Hero had taken a 5% stake.
Shares in the London-listed food delivery company rose by as much as 10% to 360p in early trading on Monday after it announced the news.
Deliveroo has had a trying few months as a listed company, ever since its shares slumped by more than a quarter on the firm’s stock market debut, when they were priced at 390p.
Equity analysts at the broker Jefferies said it was “hard to say with conviction at this point what Delivery Hero’s intention is” with its Deliveroo stake.
The 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 €33bn (£28bn), more than four times higher than that of Deliveroo. Delivery Hero operates in more than 50 countries, across Europe, central and South America, the Middle East and Asia where it 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 largest market. The German firm sold Hungry House to Just Eat in 2016.
Demand for food delivery services from Deliveroo and rivals including Uber Eats and Just Eat Takeaway boomed during the coronavirus pandemic, when lockdown restrictions closed cafes and restaurants for large periods of time.
However, analysts are questioning how the sector will fare after the reopening of hospitality, and as established players battle to expand into new markets.
Analysts at Jefferies said they believed the food delivery sector was entering what it called the “fourth age” after flurries of consolidation in the market.
They added: “The profile of an operator positioned to do well is one with delivery in its DNA, an aggressive and progressive attitude to leveraging delivery, and a first-mover advantage in grocery, preferably on the dark store model.”
Food takeaway services are also facing competition from a number of new fast-track grocery delivery firms, such as Getir, Dija, Weezy and Gorillas, which promise the arrival of supplies in 10-20 minutes.
Many pick the groceries from “dark stores” – small local distribution centres – which are like corner shops but which consumers cannot enter.