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Picture: BLOOMBERG
Picture: BLOOMBERG

Just Eat Takeaway.com’s shares jumped the most in almost four years on Wednesday after Amazon.com agreed to take a stake in its Grubhub business. 

The stake is part of a partnership where Amazon will offer US Prime users a one-year membership to the food delivery service, the Dutch company said in a statement. 

The deal is a vital boost for Just Eat Takeaway, which has seen its share price crash 67% in 2022 hitting a record low on Tuesday. The company also faces internal turmoil after it launched an investigation into its COO’s personal conduct and its chair stepped down in May.

Amazon will receive options for a 2% stake in Grubhub and will have the opportunity to increase the holding to 15%, Just Eat said. Amazon’s stake is in the form of warrants, which will vest depending on how well the partnership performs and how many new customers it attracts. 

Just Eat shares jumped as much as 20% in Amsterdam on Wednesday, the biggest intraday gain since December 2018, and were up 17% at 11.06am.

“The Amazon partnership is both material and welcome,” Jefferies analyst Giles Thorne said in a note to investors. “Grubhub has secured not just a very powerful partner, but also a very efficient acquisition channel. For a hitherto stranded asset and deadweight to the JET equity, this is positive news.” 

The membership agreement will renew every year unless Amazon or Grubhub terminates it, and Just Eat will continue to explore a full or partial sale of the US business, Just Eat said. The company announced plans to find an investor or bidder for the US business in April, less than a year after buying Grubhub for $7.3bn. 

Grubhub also attracted preliminary interest from private equity firms including Apollo Global Management, Bloomberg reported in June.

Just Eat CEO Jitse Groen is under pressure to find a way to reignite growth after a slew of competitors took market share and restaurants that had been closed during the Covid-19 lockdowns reopened to diners. 

In a presentation to analysts and investors in October, Groen laid out a strategy to grow in the US, targeting suburbs in key markets and testing mini warehouses in New York for faster order fulfilment. 

The Amazon deal will be neutral for Grubhub’s financial results in 2022 and add to cash flow and earnings starting in 2023, Just Eat said in the statement.

Bloomberg News. More stories like this are available on bloomberg.com

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