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Investing.com -- Deliveroo (OTC:DROOF) shares edged up 1% as the company announced its plan to exit the Hong Kong market, a move that is expected to support its free cash flow (FCF) and EBITDA trajectory.
The decision comes after acknowledging intense competition in the region, particularly from rival Meituan, and a strategic choice not to engage in continuous promotions and discounts.
The company’s departure from Hong Kong, which accounted for approximately 5% of its Group and was adjusted EBITDA negative, is scheduled for 7 April 2025. In a strategic shift, Deliveroo will sell some of its assets to Delivery Hero’s foodpanda.
This transition will not only redirect Deliveroo’s customers and couriers to the foodpanda platform but also expand foodpanda’s merchant offering, as some restaurants and grocery businesses previously exclusive to Deliveroo will move over to foodpanda.
Morgan Stanley (NYSE:MS) commented on the news, stating, "while the news was not expected, it is also not totally unsurprising in light of the situation not seemingly being sustainable."
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