Deliveroo, a U.K.-based food delivery firm founded in 2013 and now backed by Amazon, announced Thursday it would go public on the London Stock Exchange with a time-limited, dual-class share structure that will ensure founder and CEO Will Shu retains a large role in moving the company forward.
An initial target price or time frame for the share offering was not announced.
“Deliveroo was born in London. This is where I founded the company and delivered our first order. London is a great place to live, work, do business and eat. That’s why I’m so proud and excited about a potential listing here,” CEO Will Shu said in a statement. “At Deliveroo we want to be the definitive food company, bringing consumers the best choice of foods, giving restaurants new opportunities to grow their businesses and providing riders with great work. We are always focused on developing the best proposition for consumers, restaurants and riders and look forward to bringing our service to new parts of the U.K. as we continue to grow.”
In an announcement of the offering, Deliveroo said it was “profitable for over six months at the operating level over the course” of 2020. But until the middle of last year, the future of the company was in jeopardy, according to multiple reports.
In May 2019, Amazon (NASDAQ: AMZN) announced it would lead a $575 million Series G round that included mutual fund giants Fidelity and T. Rowe Price, as well as Greenoaks Capital. The round brought total funding to $1.53 billion and valued the company at approximately $7 billion.
But U.K. regulators put a hold on that funding a few months later. The country’s Competition and Markets Authority (CMA) served an initial enforcement order (IEO) to the two companies in June to clear concerns over the transaction. The IEO served two purposes – one, it immediately halted the tie-up between Amazon and Deliveroo and forced the two businesses to operate separately, and two, it bought some time for the CMA to decide if it needs to launch a formal probe.
The CMA in August 2020 gave approval for Amazon’s investment, giving the U.S.-based e-trailer a 16% stake in the company. According to CNBC, U.K. authorities had given tentative approval to the deal earlier in 2020 after concerns grew that Deliveroo might fail financially unless the deal was finalized.
In its announcement on Thursday, Deliveroo cited a Capital Economics analysis of its importance to the U.K. economy.
“The independent analysis reveals that Deliveroo has supported 46,700 jobs in the U.K., including 38,300 in the restaurant sector since its launch in 2013. This is in addition to the thousands of self-employed riders who have worked with the company since launch and demonstrates the value Deliveroo’s operations add to the U.K. economy,” the firm said.
Deliveroo plans to expand its Editions ghost kitchens concept in 2021, as well as expand on-demand grocery delivery and its Plus and Signature services, which allow customers easier access to online ordering and delivering through restaurants’ own websites.
In 2018, Uber (NYSE: UBER) was reportedly in talks to acquire Deliveroo, which was valued at approximately $2 billion at the time, but that never materialized.
The dual-class share structure will be limited to three years before Deliveroo moves to a single-share structure.
“Deliveroo is proud to be a British company, and the selection of London as its home for any future listing reflects Deliveroo’s continued commitment to the U.K. London is not just where Deliveroo was born, it is one of the leading capital markets in the world, with an incredible technology ecosystem, sophisticated investment community and a skilled talent pool,” Claudia Arney, chair of Deliveroo, said. “The time-limited dual-class structure would provide Will and his team with the certainty needed to execute against their ambitious growth plan to become the definitive online food company. We welcome Lord Hill’s recommendations to support modernization of the market and continued tech sector growth in the U.K.”