Just Eat Takeaway in deal talks with Grubhub

Grubhub is in advanced merger talks with its European rival Just Eat Takeaway about an all-stock deal that could create a new world leader in online food delivery. 

Discussions between New York-based Grubhub, which currently has a market capitalisation of $5.3bn, and the €12.5bn Amsterdam-headquartered Just Eat Takeaway have intensified in recent days as Uber, another potential suitor, cooled on the idea of a merger over regulatory concerns.

“The management board of Just Eat Takeaway.com confirms that it is in advanced discussions with Grubhub regarding an all-share combination,” the London-listed company said in a statement. 

A deal could be announced as early as this week, said a person close to the matter, although the two sides were still finalising the terms of the agreement. 

Just Eat Takeaway’s shares fell 13 per cent after the statement was issued, which could complicate negotiations given the all-stock nature of the deal. Grubhub’s share price remained broadly unchanged on the news. 

Grubhub has decided to switch towards a combination with its European rival partly as it feared that an acquisition by Uber could take a long time to get approved by regulators, potentially leaving the Chicago-based group in limbo, said a person briefed about the matter. 

Uber’s failure to reassure Grubhub over the antitrust obstacles is a blow that could have broader ramifications about its hopes to grow and consolidate the food delivery market. Uber’s share price fell by more than 4 per cent on Wednesday. 

A person familiar with the conversations said Uber had become frustrated “both by the continued leaks, [Grubhub’s] stalling on the deal, as well as doubts over [Grubhub’s] ability to respond appropriately to the regulatory hurdles that are doubtlessly ahead.”

Jitse Groen, Takeaway’s founder and chief executive, is launching his latest potential multibillion-dollar deal just weeks after his merger with London-based Just Eat was approved by competition regulators in the UK.

Takeaway 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.

Spokesmen for Grubhub and Uber declined to comment. 

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.

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