Grubhub which was in discussions with Uber for a merger has now been taken over by Just Eat Takeaway, a European food delivery service. The deal has been finalized at $7.3 billion which will help Just Eat Takeaway to create a strong presence in the United States. Just Eat Takeaway will be valuing Grubhub at $75.15 per share, a 27% premium to Grubhub’s closing price of $59.05.
Post the merger, Grubhub’s founder and CEO Matt Maloney will join Just Eat Takeaway’s board and handle the operations in North America. The companies are looking forward to creating the world’s largest food delivery business outside China. Maloney said the companies would place “extra value on volume at independent restaurants, driving profitable growth.”
According to the sources aware of the matter, Uber’s discussions of acquiring Grubhub foundered overprice and regulatory concerns. If the company’s initial plans of combining Uber Eats with Grubhub could come through, then Uber would have been the leader in the food delivery business with 55% market share. This had attracted antitrust eyes.
The coronavirus crisis has led to an increase in food deliveries in the US as restaurants have been shut down. The competition in the industry is extremely fierce as companies record losses each year due to massive investments in marketing and offers. According to a global law firm, Linklaters, there have been about 25 mergers in the food delivery business in 2018 and 2019 which indicates the heavy competition.
Just Eat Takeaway is also a product of merger between Just Eat and Takeaway.com. The deal was finalized this year itself in $7.8 billion as they compete with Uber Eats and Deliveroo in Europe. The road ahead will be interesting to follow as the companies are coming up with innovative ideas to retain consumers through the fierce competition.