Just Eat Takeaway.com nears all-stock deal for Grubhub
Deal could be finalized as early as Wednesday
Grubhub Inc. is nearing a deal to combine with Just Eat Takeaway.com NV, as the food-delivery company prepares to turn its back on weeks of negotiations with Uber Technologies Inc.
GRUBHUB ON UBER TAKEOVER RUMORS
Grubhub and Just Eat, a Netherlands-based food-delivery company, are working on an all-stock deal that could be finalized as early as Wednesday, according to people familiar with the matter.
Uber and Grubhub have been negotiating a deal to combine but the talks have been bogged down over various issues including who would shoulder the bulk of the antitrust risk, some of the people said. Uber's board is planning to meet Wednesday and may officially pull the plug on Grubhub talks then, the people said.
A food delivery courier for Grubhub Inc. wears a protective mask in New York. (Jeenah Moon/Bloomberg via Getty Images).
There is no guarantee it will do so or that Grubhub will seal an agreement with Just Eat.
Just Eat confirmed in a statement Wednesday that it is in advanced discussions with Grubhub about an all-stock combination, confirming an earlier report by The Wall Street Journal. CNBC reported earlier Wednesday that the Grubhub-Uber talks were close to derailing and that Grubhub was nearing another deal.
The Wall Street Journal reported May 17 that Just Eat and another European player, Delivery Hero SE, were considering a bid for Grubhub but were unlikely to jump into the fray while a deal was still Uber's to lose.
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In addition to its food-delivery business, Uber Eats, Uber has a big ride-hailing operation that has been hobbled by stay-at-home orders occasioned by the coronavirus pandemic. The food-delivery industry, by contrast, has experienced a surge in demand.
Just Eat Takeaway was created earlier this year through the $11.1 billion merger of the U.K.'s Just Eat and Netherlands-based Takeaway.com. It brought together one of the biggest food-delivery companies in the U.K, with Takeaway.com, which had a big presence in continental Europe, to create a European giant in the cutthroat industry.
Given that Just Eat doesn't have a presence in the U.S., the risk that regulators seek to block the deal or require significant divestitures is seen as lower than it would be in the case of a tie-up between Grubhub and Uber. But striking a trans-Atlantic deal using stock as currency will bring its own set of complications, and it may need signoff from Just Eat's shareholders.
Grubhub had a market value of roughly $5.3 billion as of Tuesday's close, while Just Eat's was around EUR14.6 billion ($16 billion).
RESTAURANTS, FOOD DELIVERY SERVICES STILL OPERATING DURING CURFEW
Competition in the U.S. meal-delivery industry has been intense in recent years as newer entrants such as DoorDash Inc. have grabbed market share with discounts and promotions. Consolidation in the sector has been expected and the need became more pressing as the coronavirus pandemic underscores the value of its services.
Uber had approached Grubhub earlier in the year but talks had fallen apart before the coronavirus dented demand for Uber's core ride-hailing business and added new impetus to its search for a deal. The companies had agreed on a price of roughly 1.925 Uber shares for each Grubhub share and had estimated potential cost savings could top $300 million, according to people familiar with the matter.
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But the potential tie-up was plagued by antitrust concerns as soon as talks became public in mid-May, with prominent politicians including Sen. Amy Klobuchar (D., Minn.) voicing concerns about decreased competition and calling on the Federal Trade Commission and Justice Department to initiate investigations should the parties decide to merge.