Talks between Grubhub’s and Uber Inc crumbled over a merger foundered due to antitrust issues. Uber and Grubhub had agreed on a price ratio of $.1925 Uber shares for each Grubhub share at a volume-weighted average price of nearly $70 per share. However, prevailing concerns over Uber’s support to Grubhub in the regulatory process scuttled the deal.
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Now Grubhub has agreed to be acquired by Just Eat Takeaway.com, an Amsterdam-based food delivery company, in a $7.3 billion deal that will make the combined company the largest online food delivery platform outside China. Under terms of the all-stock transaction announced Wednesday, Just Eat Takeaway.com is valuing each share of Chicago-based Grubhub at $75.15.
The combined firm will be headquartered in Amsterdam, with a North American headquarters in Chicago. Grubhub CEO and founder Matt Maloney will join Just Eat Takeaway.com’s board and lead the North American office. Shareholders of each company need to approve the transaction. The deal is expected to close in the first quarter of 2021.
In 2019, Grubhub had 23 million customers, 180 million orders and revenues of $1.3 billion. Just Eat and Takeaway.com had a combined 48 million customers, 413 million orders and revenues of $1.7 billion. The U.K.’s Just Eat and the Dutch online food ordering Takeaway.com merged in a $7.6 billion deal in April. As of Dec. 31, Grubhub employed about 2,700 people, including 1,200 in Chicago.
Last month, Grubhub was reportedly in merger talks with Uber Technologies, a deal that would have brought together two of the top three food delivery platforms in the U.S., but it raised antitrust concerns.
Grubhub offers services in more than 4,000 cities in the U.S. and has struggled as competition in the food delivery industry has increased. The firm reported a first-quarter loss of more than $33.4 million, compared with a $6.9 million profit in the year-ago period.
Since January, reports have surfaced that Grubhub might be sold, but the company “unequivocally” denied those reports. Just Eat Takeaway.com operates in Europe, Canada, Mexico, Australia, Brazil, New Zealand and Israel. The company doesn’t have a presence in the U.S.
Before the coronavirus pandemic, food delivery companies struggled to gain new customers and turn a profit. But as millions of Americans were ordered to stay home to quell the spread of the virus, the industry blossomed.
Despite the boost, Grubhub faced criticism over the fees it charges to restaurant operators. In a May earnings call, Maloney rejected the notion that the company was cheating restaurants, and said it was roughly breaking even on orders during the pandemic. Chicago later announced new rules requiring food delivery firms to provide consumers with receipts that itemize all charges.
Joe Pawlak, managing principal for Technomic, a Chicago-based food service research and consulting firm, said demand for food delivery likely will continue as states reopen because some customers might not want to dine out due to ongoing health concerns.
“There is a number of consumers who don’t feel comfortable eating out. But they still want to experience meals. One way is by getting it through delivery,” Pawlak said.
Consolidating the market could benefit other food delivery companies by giving customers fewer options and minimizing competition on price, Pawlak said.
“Their strategies to get a hold on customers have been to offer free delivery service deals and minimize delivery fees, but under that model, they aren’t making enough money,” he said.
