Just Eat Takeaway combines with Grubhub in $7.3bn deal

Just Eat Takeaway, the European food delivery app, has agreed to acquire Chicago-based Grubhub for $7.3bn in stock in a deal that could create a world leader in online delivery.

Just Eat Takeaway beat out Uber, which had put Grubhub in play by approaching its US rival in early February. Uber lost the race partly over regulatory concerns, according to people briefed on the matter. Germany’s Delivery Hero was also considering a bid.

Matt Maloney, Grubhub’s chief executive, said Jitse Groen, Just Eat Takeaway’s chief executive, moved “very swiftly”, putting together an offer in just three weeks.

Mr Maloney added that the combination with its larger European peer would give the “financial strength and flexibility . . . to be as aggressive as possible and able to take the fight to Silicon Valley”, where Uber and rival DoorDash are based.

“If Uber is going to get an inch, they are going to have to fight for that in every single market in the United States,” Mr Maloney told the Financial Times. “Broadly, this is about building the number one pure-play food delivery platform outside of China”, as measured by revenues.

Under the terms of the deal, Grubhub shareholders will receive Just Eat Takeaway shares worth $75.15 for each of their existing shares, a little over 60 per cent higher than where Grubhub was trading before reports about deal talks with Uber emerged in May.

Just Eat Takeaway shareholders will control about 70 per cent of the combined company, while the rest will be owned by Grubhub’s investors.

Uber approached Grubhub in early February with a takeover proposal, according to people briefed about the matter. Its failure to reassure Grubhub over its antitrust concerns is a blow that could have broader ramifications for its hopes to grow and consolidate the food delivery market.

Uber’s share price fell 4.8 per cent on Wednesday. 

“Like ride-sharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants,” Uber said in a statement. “That doesn’t mean we are interested in doing any deal, at any price, with any player.”

Mr Groen had swept in with a competing offer for Grubhub just weeks after his company Takeaway combined with London-based Just Eat following approval by competition regulators in the UK. Takeaway had won the $8bn deal for Just Eat late last year after fighting off a rival bid from Naspers, whose Prosus unit holds stakes in several online food businesses around the world.

On the rush to sign a new deal so soon after completing a drawn-out merger, Mr Groen told the FT: “Would it be better to just wait one year after every transaction? Yes, sure. We’d get more sleep. But that’s just not how the world turns.”

Consolidation is accelerating in the online food delivery market, as more restaurants and consumers turn to apps for their dining needs during coronavirus lockdowns

Grubhub’s business model is more closely aligned with Just Eat Takeaway, which is focused on offering a marketplace for takeaway outlets to offer their own services, than Uber’s, which uses its own delivery network to bring meals from restaurants that would not traditionally offer take-out. 

The marketplace business has traditionally offered higher margins, though Grubhub’s battle with Uber Eats sent it into the red last year. Mr Groen has repeatedly stated that he does not believe delivery services such as Uber, DoorDash or Deliveroo can ever be profitable.

“I know the competitive situation is different in the US from Europe,” Mr Groen said. “But I know that [Grubhub] is a very good business, that it is mostly a marketplace, that it has dominant positions in a lot of cities across the US. So this feels to me exactly like our own company.”

Grubhub was advised by Evercore and Centerview. Just Eat Takeaway was advised by Goldman Sachs and Bank of America Merrill Lynch.

Reporting by James Fontanella-Khan and Andrew Edgecliffe-Johnson in New York, Tim Bradshaw in London, and Dave Lee and Miles Kruppa in San Francisco

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