Amazon lends Deliveroo money to avoid cash crunch

By Lauren Fruncillo January 15, 2020 - 11:31 pm

‘You’ve got a friend in me’ says Amazon to Deliveroo as they offer the online resturant food delivery company a loan whilst their last funding round is being investigated. Bloomberg reports that despite it being uncertain how much money was lent by Amazon, Deliveroo now have enough to continue operation which wouldn’t have been possible without the help.

According to their annual report Deliveroo had £185 million in cash by the end of 2018 and despite sales going up 72% in the same year its net loss before tax was a steep £232 million.

CMA investigate purchase of Deliveroo stake

Last year we wrote that Deliveroo had announced a $575 million funding round led by amazon, interesting considering the short lived Amazon restaurants that were shut down in 2018. Soon after the announcement the Competition and Markets Authority froze the investment as they believed it could cause damage to competition in restaurant and grocery delivery. Oops. The CMA is currently undergoing an in-depth investigation of Amazon’s funding investment and will rule on the deal by June. If the CMA approve the original deal then the loan gets converted into equity.

“to comply with the Initial Enforcement Order issued in June, which requires the parties to operate separately and restricts the parties from entering into non-ordinary course agreements like a loan. Deliveroo and Amazon have been working closely with the CMA and will continue to do so.”
– Amazon representative

By the looks of it Amazon won’t give up until they get a slice of the restaurant food delivery pie despite it’s own restaurant service in the UK and US closing down. Perhaps they can see a better way forward now that they failed to see before… or is it simply the attraction of a peloton of cyclists rushing Prime Now one hour deliveries to customers in between pizza and curries.

Meanwhile, other competitors seem to be doing well in their consolidations with NV declaring a victory in its battle for Just Eat.

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