Food Delivery, Just Eat Takeaway, To Buy GrubHub in $7.30 Billion Deal

Food Delivery, Just Eat Takeaway, To Buy GrubHub in $7.30 Billion Deal
June 12, 2020


European food delivery firm, Just Eat NV (OTC: TKAYY, Euronext Amsterdam: TKWY-NL) is acquiring the US food delivery company GrubHub Inc (NYSE: GRUB) in an all-stock deal worth $7.30 billion. The agreement has happened after takeover talks between Grubhub and Uber (NYSE: UBER) collapsed. The transaction, subject to regulatory approval, would result in the creation of the world’s largest food delivery enterprise away from China. The market showed a mixed reaction to the takeover.  While the shares of Grubhub gained 4.64% or $2.74 to close at $61.79, Just Eat’s shares lost 7% or $0.70 to close at $9.30.

Under the takeover agreement, for each shareholder of Chicago, Illinois-based Grubhub, 0.6710 Just Eat, ordinary shares will be given. This implies a value of $75.15 for each Grubhub share (based on Just Eat’s shares closing price of €98.602 on June 9th, 2020. The companies anticipate the deal to be completed in the first quarter of 2021.

To give an idea of how big the merged entity would be, Just Eat stated that the combo processed 593 million orders last year. Amsterdam, Netherlands, further stated that the combined entity would have more than 70 million active customers worldwide.

Following the acquisition, Matt Maloney, CEO and founder of Grubhub, will join the Just Eat management board and head the combined entity’s operation in North America. Jitse Groen, CEO and founder of Just Eat, will take care of the global business of the merged entity.

Regarding the takeover, Groen said, “[….] 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 said, “When Grubhub and Seamless were founded, the online takeout industry didn’t exist in the US. My vision was to transform the delivery and pick-up ordering experience. [….] We share a focus on a hybrid model that places extra value on volume at independent restaurants, driving profitable growth. Supported by Just Eat, 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.”

The takeover deal ends an uncertain period for Grubhub, which had been in discussions with another interested player, Uber’s Eats division. For almost a year, Uber was sporadically talking to Grubhub. Once Uber walked away due to antitrust worries, Just Eat quickly clinched the deal. Uber, however, acknowledged that consolidation is a must in the food delivery industry for generating profits.

Uber stated, “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.”

The merger deal with Just Eat is not anticipated to face any regulatory hurdles, unlike the fallen deal with Uber. Therefore, the stock of GrubHub is expected to remain range-bound with a slight bullish bias.

Technically, the stock is rising after receiving support at 60. The next resistance is anticipated only near 85. The stock is also trading above its 50-day moving average. Furthermore, the Chaikin money flow indicator also has a positive reading. Therefore, we are anticipating the stock to move up in the short-term.

gru - technical analysis - 12th June 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.


Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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