In a significant development, European food-ordering Just Eat Takeaway.com NV, has agreed to acquire Grubhub Inc, subject to regulatory approval. If the all-stock deal goes through it would create the world’s largest food delivery company outside of China.
The deal would create “a company built around four of the world’s largest profit pools in food delivery: the U.S., the UK, the Netherlands and Germany,” said both companies in a joint statement.
For Grubhub, the deal offers an escape from antitrust concerns that plagued its talks with Uber Technologies Inc’s Eats division.
Earlier in May, Uber had approached Chicago-based Grubhub for an all-stock deal but that fell apart this week for reasons not disclosed. In a statement Uber said, the food delivery industry needs consolidation, but “that doesn’t mean we are interested in doing any deal, at any price, with any player.”
According to media reports, Uber’s offer trigerred Just Eat Takeaway to reach out with its own offer, said Grubhub CEO Matt Maloney.
The development comes in the wake of Just Eat acquiring Takeaway earlier this year in January, for $7.8 billion.
Maloney knows Just Eat Takeaway’s billionaire CEO Jitse Groen since 2007, and both companies have similar models of being a marketplace for customers to find restaurants and order from them.
Just Eat Takeaway.com presented an offer “at a price that made the decision very easy,” said Maloney while adding, the deal provides Grubhub “financial strength and flexibility.”
With the news reaching the market, Grubhub’s stock price rose by 6% in aftermarket trading while Just Eat Takeaway’s shares closed lower by more than 13% in Amsterdam.
According to experts, a consolidation in the U.S. restaurant delivery sector is long overdue, given the surge in demand, especially in these times of COVID-19 lockdown where many people are forced to stay at home to stem the spread of the coronavirus.
In a statement, Just Eat Takeaway said, it expects the deal to close in the first quarter of 2021, pending shareholder and regulatory approval.
According to Chris Sagers, who teaches at Ohio’s Cleveland-Marshall College of Law, the deal is likely to sail through smoothly as far as U.S. antitrust regulators are concerned.
The combined company will be headquartered in Amsterdam.
In a joint statement, the companies said, In April and May, orders surged by 41% across the companies’ main markets.