One of Amazon’s [NASDAQ: AMZN] biggest moves in recent times could be up for review by the U.K’s competition regulator. As per an article published by Bloomberg earlier in the day, the regulator is looking into Amazon’s bid to invest in Deliveroo. The regulator has stated there is reasonable grounds to believe that the two companies were operating as a single entity or could start doing so in the near term.
Two months ago, Amazon announced that it would be investing roughly $575 million in British startup Deliveroo. The money would go towards expanding Deliveroo’s tech team and other aspects to the business including its networks. Amazon is aiming to gain market share in the highly competitive U.K market through Deliveroo, a company that now serves about 33% of the U.K population, and aims to push that number to 50% by the end of 2019. This makes it one of the most competitive food delivery companies in the U.K market, and a huge breakthrough for Amazon, if it goes through. That’s because the two have the right mix of strengths to grow in this market. Deliveroo has the market share, while Amazon has the logistical expertise. According to Deliveroo’s CEO, the company was looking to tap into Amazon’s operational and logistical expertise.
With regulators now possibly looking into the deal, chances are that it could be delayed. However, it is important to note that regulatory reviews into such deals are quite common, and may not necessary kill the deal between these two companies. If it goes through, this deal could have a positive impact on Amazon’s competitiveness, and revenues in the long run.
From a look at the charts, this news hasn’t led to any significant price action in Amazon stock. AMZN closed the day on July 3rd at $1,939 with gains of 0.24%. There isn’t much action pre-market either. This could be due to the low activity in the markets. It’s a Friday, and July 4th was a major holiday in the U.S. This stock closed the day in a range on Wednesday, and if it doesn’t push above $1941.59 in the day, it could be range-bound in the day.