Deliveroo rallies as activist investor Sachem Head said to have taken stake

(Sharecast News) - Deliveroo shares shot higher on Thursday following a report that activist investor Sachem Head Capital Management has taken a stake in the food delivery firm. Bloomberg cited people familiar with the matter as saying that Sachem Head sees Deliveroo as undervalued and that it could eventually become a takeover target, but isn't yet actively pushing for changes.

It was understood that Deliveroo is planning defence strategies as it could become vulnerable to takeovers when a dual-class share structure expires in April next year.

Citi said in a note that the potential for further consolidation in food delivery involving Deliveroo has been a popular topic of investor debate, particularly as the class B shares of the company's founder and chief executive, Will Shu, are due to expire in April 2024.

Citi noted that Shu's share structure currently gives him around 5% to 6% ownership but around 51% to 56% share of votes.

At 0840 BST, the shares were up 6.6% at 123.20p.