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Amazon and Deliveroo are deepening ties with Prime food delivery bundle in U.K. and Ireland

Amazon and Deliveroo are deepening ties with Prime food delivery bundle in U.K. and Ireland

September 16, 2021: -On Wednesday, Amazon announced its first significant tie-up with the U.K. food delivery firm Deliveroo since it invested in the company two years ago, which offers Prime customers free delivery on takeout orders for some amount for a year.

Millions of Amazon Prime members in the U.K. and Ireland will get access to the lower tier of the Deliveroo Plus service, which means they’ll be eligible for free deliveries when their orders exceed £25 in value.

The partnership came after regulators at the Competition and Markets Authority investigated the investment of Amazon in Deliveroo to check if it presented any competition concerns.

Amazon’s investment was approved after regulators concluded the deal didn’t present any huge competition concerns and that Deliveroo would struggle to survive without investing it.

It gave the e-commerce giant a 16% stake in Deliveroo, led by former Morgan Stanley banker Will Shu.

Amazon is having 200 million Prime subscribers worldwide and an undisclosing amount in the U.K. and Ireland.

Deliveroo refused to share if Amazon has paid it an extra fee for the benefit of being able to offer Prime members access to the “silver” level Deliveroo Plus, which usually costs £3.49 a month.

In May 2019, Deliveroo announced it had introduced a $575 million funding round by Amazon. Just two months later, the CMA put the brakes on the deal. Then, the CMA is launching a formal probe to examine potential anti-competitive implications.

When it began its investigation, one of the CMA’s main concerns was the potential for the deal to prevent Amazon from re-entering the online restaurant food market. Amazon had operated an online takeout business called Amazon Restaurants but subsequently exited the market in 2019.

Deliveroo was on the London Stock Exchange list in April with a market value of roughly £7.5 billion. But shares tanked by almost 25% on the opening day of trade. Shares are recovering somewhat since then, and the company’s market cap now sits at £8.6 billion.

Amazon sold almost £100 million worth of Deliveroo shares when it went public, reducing its stake from 16% to about 12%. However, the e-commerce giant remains its biggest shareholder.

Lisa Leung, director of Prime and marketing at Amazon U.K., said that “We look for ways to offer even the value to Prime members giving them the best of shopping and entertainment.”

She added, “That is the reason we are excited for this offer with Deliveroo so millions of Prime members in the U.K. and Ireland can get the convenience of great meals delivered fast.”

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