Just Eat Takeaway in talks for all-stock deal with Grubhub
New talks send Just Eat Takeaway’s shares down as much as 15%
New York — Just Eat Takeaway.com is in talks to buy meal-delivery company Grubhub, in a bid to launch itself in the US and become a major rival to Uber Technologies.
Amsterdam-based Just Eat Takeaway.com is in “advanced discussions” for an all-share deal, it said in a statement on Wednesday. Grubhub has a market value of $5.2bn, while Just Eat Takeaway.com is worth €12.6bn.
The bid comes less than two months after the Dutch food delivery company received antitrust clearance from the UK for its $8bn acquisition of Just Eat. The new talks took investors by surprise, with shares in Just Eat Takeaway.com falling as much as 15% on Wednesday, the most on record.
Uber shares also tumbled after a CNBC report said the ride-hailing company is close to ending its merger talks with Grubhub due to antitrust concerns. Uber fell 4% to $35.14 on the report. A spokesperson for Uber declined to comment.
The coronavirus pandemic is driving a surge in demand for food delivery as many restaurants keep dining rooms closed and people are spending more time at home. However, the potential deal between Uber and Grubhub quickly drew scrutiny from Washington officials concerned about the fees such companies charge restaurants and their treatment of delivery drivers.
Just Eat Takeaway, which does not operate in the US but owns SkipTheDishes in neighbouring Canada, would be entering a fiercely competitive market. DoorDash, the market leader in the US, and Uber have eaten up market share, leaving Grubhub with 23% as of the end of April, according to market research firm Second Measure. Uber and Grubhub together would control 55%.
The battle for market share has been expensive, and even with a pandemic boost, profits have been elusive. Gross food sales for Grubhub rose 8% to $1.6bn in the first quarter, and the company reported a net loss of about $33m.
“Fighting off established rivals DoorDash and Uber Eats in the highly competitive US market amid limited synergies will be costly. Just Eat Takeaway has not yet published combined financials, including Just Eat. It may be able to pay a lower premium as Grubhub could be under pressure if Uber walks away amid antitrust concerns.”
Clinching Grubhub following the Just Eat deal would mark another major acquisition by billionaire Jitse Groen, the Dutch businessman who created Takeaway in 2000 in his dorm room at the University of Twente in the town of Enschede, near the German border, said Bloomberg Intelligence Tatiana Lisitsina.
In an interview with Bloomberg in June 2018, Groen stressed that in his view “the most value is in being the largest, by far”.
Before the takeover of Just Eat, Takeaway in 2018 agreed to buy Delivery Hero’s German operations for about $1bn, ending an expensive rivalry in a country where both were competing for market share at the cost of profitability.
The Grubhub deal was seen as a way to bolster a part of Uber’s business that executives see as crucial to growth and eventually to turning a profit. The virus is decimating Uber’s main business of ride-hailing, resulting in mass job cuts at the company.
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