Last week, Just Eat Takeaway.com announced it will acquire food delivery service Grubhub for $7.3 billion, making it one of the largest food delivery companies in the world, reports The New York Times. The acquisition is an all-stock deal with Just Eat Takeaway paying a 27% premium of $75.15 per share. On the day the deal was announced, Grubhub stock closed at $59.05 per share. The deal is subject to standard closing conditions, regulatory approvals and the approval of both companies’ boards.
The deal is expected to close in the first quarter of 2021. The company’s world headquarters will be in Amsterdam, and the U.S. headquarters will be located in Chicago, where Grubhub is currently based. Last year Just Eat Takeaway.com and Grubhub delivered 593 million food delivery orders combined. They have approximately 70 million total users globally.
Grubhub founder and CEO Matt Maloney will join the Just East Takeaway board and oversee North American operations. Two current Grubhub directors will join the Just Eat Takeaway.com advisory board. Just Eat Takeaway is the combination of two European Just Eat and Takeaway.com who merged earlier this year in a $7.8 billion deal.
“Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents. Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector,” said Jitse Groen, CEO and founder of Just Eat Takeaway.com, in a news release. “I am excited that we can create the world’s largest food delivery business outside China. We look forward to welcoming Matt and his team to our company and working with them in the future.”
Maloney also commented on the acquisition:
“When Grubhub and Seamless were founded, the online takeout industry didn’t exist in the U.S. My vision was to transform the delivery and pick-up ordering experience. Like so many other entrepreneurs, we started modestly – restaurant by restaurant in our Chicago neighborhood. Today, Grubhub is a leader across North America,” Maloney said. “I’ve known Jitse since 2007 and his story is much like mine. Combining the companies that started it all will mean that two trailblazing start-ups have become a clear global leader. We share a focus on a hybrid model that places extra value on volume at independent restaurants, driving profitable growth. Supported by Just Eat Takeaway.com, we intend to accelerate our mission to be the fastest, best and most rewarding way to order food from your favorite local restaurants in North America and around the world. We could not be more excited.”
This deal puts an end to negotiations between Grubhub and Uber, who had hoped to purchase Grubhub to combine with its food delivery service Uber Eats. According to sources who declined to be identified, negotiations were not successful because the companies could not agree on price, and there was concern that a deal would not pass the necessary regulatory hurdles. If the two companies had struck a deal, they would have about 55% of total market share of food delivery in the United States, says The New York Times.
Once Just Eat Takeaway.com learned of a possible deal with Uber, the company pursued Grubhub. Uber eventually dropped out, and Just Eat Takeaway.com signed a deal immediately, reports Reuters.
“Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn’t mean we are interested in doing any deal, at any price, with any player,” Uber said in a statement.
Grubhub’s food delivery service features more than 300,000 restaurants in 4,000 cities in the U.S. In 2019, the company had 23 million active customers, recorded 180 million orders, gross merchandise value (GMV) of $5.9 billion and revenue of $1.3 billion. In addition to the Grubhub brand, the company also owns Seamless, LevelUp, AllMenus and MenuPages. In April and May of this year, gross food sales were up 59% compared to April and May of 2019.
In its news release, Just Eat Takeway.com highlights some of the reasons it chose to pursue this acquisition:
- The combined companies will create the largest food delivery service in the world, outside of China, measured by GMV and revenue.
- The U.S., U.K., Netherlands and Germany are four of the largest profit markets for the food delivery industry.
- Grubhub will benefit from the strength of Just Eat Takeway.com, while providing the European company with access to a market with a large footprint.
- The companies can share best practices and provide a broader offering together.
Similar to DoorDash and Postmates, Grubhub launched a food delivery subscription service, Grubhub+, this spring. Priced at $9.99 per month, subscribers get unlimited free delivery and more restaurant perks than nonsubscribers.
Insider Take:
This is a fascinating story of two food delivery pioneers who have made names for themselves and ultimately combined their labors of love. With bases on different continents, they will have multiple regulatory hurdles to overcome, but they will have an easier time of it than a combination of Uber Eats and Grubhub would have had in the U.S. We also love the all-stock transaction with premium pricing. First, the all-stock transaction acts an incentive to Maloney to continue to grow Grubhub. Second, with the growth of ordering takeout (or takeaway, depending on where you’re from) during the pandemic, it is a certainty that GMV and revenue will increase for at least the next quarter, and likely for the next several quarters, so Grubhub can demand a higher price for their company. Our only hope is that they change their name – and URL – so it is easy to remember.
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June 17, 2020 at 06:19PM
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Just Eat Takeaway.com Acquires Grubhub for $7.3 Billion in All-Stock Deal - Subscription Insider
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