Amazon

Amazon Bails Out Cash-Strapped Deliveroo

Amazon is lending a helping hand to Deliveroo amid the food delivery startup’s troubles with the U.K. government. The U.K. is investigating Deliveroo’s last funding round. Without financial aid from Amazon, the company would have risked running low on funding, according to Bloomberg.

Deliveroo’s spokesperson declined to comment. However, an Amazon spokesman referred to an earlier statement that said Deliveroo should have broad access to investors and supporters, then declined to comment further.

Last May, Amazon invested $75 million into Deliveroo, which was frozen by the Competition and Markets Authority (CMA). The CMA’s reasoning was that Amazon’s support of Deliveroo, including a bid to buy a minority holding in the company, could destabilize and harm competition in the grocery industry.

Last month, the CMA said it would investigate Amazon’s conduct with the investment, with plans to come to a conclusion by June 11. The loan will be converted into equity if the CMA approves the original deal, according to those familiar with Amazon’s inner-workings.

At the end of 2018, Deliveroo had around £185 million (more than $240 million USD), according to its last annual report. Global sales increased 72 percent in 2018, but its net loss pre-tax widened to £232 million.

Amazon is likely trying to expand its role in the restaurant food delivery market. Its previous attempts with its own service failed to win a significant market share in both the U.K. and U.S. Amazon Prime offers grocery delivery to major British cities, but the service faces competition from Ocado Group, an online grocery company that makes its own deliveries, and licenses its technology to traditional grocery venues.

Deliveroo CEO Will Shu said he hopes to tap into Amazon’s expertise in business. The deal is waiting to be approved by the CMA, but rivals are staying busy, with Takwaway.com recently securing Just Eat after a long battle for the acquisition. In addition, Germany’s Delivery Hero said it would take control of Woowa, the biggest South Korean food delivery app.

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