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Amazon and Deliveroo take aim at Just Eat with Prime deal

Just Eat shares fell 4% as investors worried about the incrested competition

Delivery Hero - Amazon and Deliveroo deal unsettles Just Eat Takeaway.com
Competition is hotting up

Amazon has parked its tanks on the lawn of Just Eat and Uber Eats by offering free food deliveries for a year through Deliveroo.

Users of Amazon Prime will get access to the app’s Deliveroo Plus scheme, which grants subscribers in the UK and Ireland free delivery on orders over £25.

Plus membership costs £3.49 a month or almost £42 a year while Amazon Prime has 200mln subscribers worldwide who pay £79 annually for free delivery the next day and access to its online content.

Amazon is also Deliveroo’s largest shareholder with an 11.9% stake, something it was only allowed to keep after a CMA inquiry into potential competition issues when it bought a 16% stake last year by providing the vast majority of a £452mln funding round.

The watchdog eventually concluded there would be no competition issues and that Deliveroo needed the cash to keep going.

Today's move though is the first commercial deal between the two companies, though it was not clear if Amazon is paying Deliveroo to provide the service.

Carlo Mocci, Deliveroo’s chief business officer, said: “Amazon is one of the most customer-focused and innovative companies in the world and we are excited to launch this offer for Prime members.”

The partnership will help it “attract new highly engaged and digitally savvy customers”, he said and inject some momentum into the Plus service, which was launched just before the company floated in March.

Amazon launched its own UK food delivery service in 2016 but shut it down last year.

Deliveroo's IPO in March was famously disastrous with the share price slumping by almost a third on its first day of dealings.

Things have improved since and shares were trading today at 336p against the 390p issue price with a rally recently sparked by news that German rival Delivery Hero (ETR:DHER, OTCQX:DLVHF) recently acquired a 5.1%.

Just Eat shares fell 4% to 6,349p as investors worried about the incrested competition.

Quick facts: Deliveroo PLC

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