Amazon lends Deliveroo cash while UK probes investment

Bloomberg

Amazon.com Inc has offered Deliveroo a loan after a UK probe into the food-delivery startup’s last funding round threatened a cash crunch, people familiar with the matter said.
Without the backing from Amazon, Deliveroo ran the risk of running low on capital, the people said.
While the size of the loan is unclear, the London-based company has significant funds to continue operating, they said, asking not to be identified because the matter is private.
A spokesman from Deliveroo declined to comment. An Amazon spokesman initially referred to an earlier statement that said Deliveroo should have “broad access to investors and supporters.”
Amazon led a $575 million investment into Deliveroo in May. It was frozen in a surprise move by the Competition and Markets Authority (CMA), which has said Amazon’s bid to buy a minority holding in the company had the potential to damage competition in restaurant and grocery delivery. The UK competition regulator said last month that it would conduct an in-depth investigation of Amazon’s approximately $500 million investment and will rule on the deal by June 11.
Amazon’s loan will be converted into equity if the CMA approves the original deal, the people said.
In a statement following the original publication of this story, an Amazon representative said the company continues “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.”
Deliveroo had about 185 million pounds ($240 million) in cash and cash equivalents at the end of 2018, according to its latest annual report. While global sales increased 72% in 2018, its net loss before tax widened to 232 million pounds.
The intervention signals Seattle-based Amazon’s commitment to expand in the restaurant food delivery market, after winding down its own service in the UK and the US, which failed to win significant market share.
Amazon Prime offers grocery deliveries to major British cities within two hours, but it faces domestic competition from the likes of Ocado Group Plc, an online grocery pioneer that makes its own deliveries and licenses its technology to traditional food shops.
Deliveroo CEO Will Shu previously told Bloomberg that he hopes to tap Amazon’s operational and logistics expertise.