Amazon.com has announced plans to reduce its stake in Deliveroo to 11.5% from the current 15.8% when the British food delivery company goes public through an initial public offering (IPO). According to Deliveroo’s IPO prospectus, the company has recently commenced roadshows for its London IPO, setting a price range of £3.90 to £4.60 per share. This range values Deliveroo at £7.6 billion to £8.8 billion ($10.46 billion-$12.11 billion), and includes the sale of new shares worth £1 billion, as well as approximately 128.2 million shares from existing shareholders at the final price.

Amazon is expected to sell around 23.3 million shares in the reduced stake, allowing the company to raise between £90.87 million and £107.18 million from the deal. Earlier last year, Amazon increased its stake in Deliveroo to 16% after receiving approval from the UK’s competition watchdog. Furthermore, the US company participated in a $180 million private funding round in January 2021, which valued Deliveroo at over $7 billion.

Apart from Amazon, other shareholders participating in the IPO include Index, DST, Greenoaks, Bridgepoint, and Accel. However, Deliveroo’s founder, Will Shu, plans to retain his 6.3% stake and will have 57.5% of the voting rights due to a dual-class share structure. Deliveroo has chosen to pursue a standard London Stock Exchange listing instead of a “premium” listing, as the use of dual-class shares is still relatively new in London. However, if recommendations from a review by former European Commissioner Jonathan Hill are implemented later this year, companies with a dual-class structure will be eligible for a premium listing.

In a unique move for the London Stock Exchange, Deliveroo has also announced a £50 million “community offer” that allows its customers to participate in the IPO. This is the first time such an offer has been made on the exchange. The shares bought through the community offer will begin trading on April 7, one week after the stock market debut. Institutional investors will be able to trade shares starting from March 31.

Deliveroo mentioned in its prospectus that it is currently facing legal proceedings in multiple countries regarding the employment status of its drivers. The company stated that the independent contractor status of its riders, which applies in most jurisdictions it operates in, has been challenged in certain markets, including its key markets. Deliveroo is currently involved in these proceedings in the UK, France, Spain, the Netherlands, and Italy.

(Links:
BBC News Article: Amazon to reduce stake in Deliveroo
Reuters Article: Deliveroo plans to list on London Stock Exchange)