MARKET REPORT: Deliveroo takeover stalls… but another one is coming

Deliveroo shares received a boost when it became the latest London-listed company to be targeted for a takeover.

The food delivery group, which was nicknamed “Floperoo” after its disastrous 2021 IPO, rose 7 percent in early trading after reports that San Francisco-based rival Doordash had approached the group.

However, according to Reuters, the talks, which began last month, ended due to a disagreement over price.

But analysts at Jefferies said this “may just be the beginning” and could open the door for more takeover interest in Deliveroo, adding: “Such is the financial, industrial and strategic logic of a Deliveroo takeover, it wouldn’t surprise us to see similar headlines reappear in short order.

“We believe the key to unlocking a featured offer from Deliveroo is understanding the sensitivities of its founder, CEO Will Shu.”

Deliveroo, which was co-founded by Shu and Greg Orlowski in 2013, floated to London in 2021 to much fanfare at a price of 390p per share, giving it a value of £7.6 billion.

But the following year the share price fell below 80p and although the company has recovered some of its losses, it is still only worth £2.1bn.

After a strong rise in early trading, shares ended the day up just 1.5p, or 1.2 percent, to 129p.

Deliveroo is just the latest London-listed company to be targeted by foreign bidders in what has been called a takeover frenzy.

Others targeted so far this year include Royal Mail owner International Distribution Services, mining giant Anglo American and drinks group Britvic.

The FTSE 100 fell 22.46 points, or 0.3 percent, to 8225.33, while the FTSE 250 fell 65.33 points, or 0.3 percent, to 20298.1.

Rising copper prices pushed miners higher, with Rio Tinto rising 28 cents, or 0.5 percent, to 5,267 cents. Airline shares were under pressure with Easyjet down 5.8p, or 1.2 percent, to 457.8p, while British Airways owner International Consolidated Airlines fell 4.3p, or 2.6%, to 163.8p .

Shares in magazine publisher Future – which owns titles including Money Week, Country Life and Four Four Two – rose 83p, or 8.3 per cent, to 1,086p after an upgrade in the City.

Analysts at Jefferies increased their price target for Future shares from 635p to 1280p and gave the stock a buy rating.

Aston Martin shares initially rose after it unveiled a limited-edition Valiant sports car and said deliveries would begin in the fourth quarter, but fell later in the day, eventually losing 4.1 pence, or 2.6 percent, to 150.7 pence.

Nat Rothschild-backed electrical components manufacturing group Volex reported a 26.3 per cent rise in sales to £722m for the year to the end of March.

Profits rose 30.5 percent to £61 million. Shares in the company, which counts Apple and Dyson among its customers, fell 23 cents, or 6.5 percent, to 331 cents.

Tool and equipment rental group HSS Hire said sales in the first five months of 2024 were 4% higher than the same period last year. Shares rose 0.2p, or 2.7 percent, to 7.5p.