GrubHub To Merge With Europe’s Largest Food Delivery Service In $7.3 Billion Deal

TOPLINE

European food delivery giant Just Eat Takeaway.com is in advanced talks to buy U.S. rival GrubHub for $7.3 billion, grabbing a share of the surging U.S. market and creating the world’s biggest food ordering service outside China.

KEY FACTS

Key background

The coronavirus pandemic has pushed the need for consolidation within the food delivery industry into sharp focus. Analysts say that the mostly unprofitable food delivery firms need to consolidate in order to survive but the surge of at-home orders during the pandemic has raised concerns over competition, and some unpalatable tactics that impact restaurants. A tie between Uber Eats and Grubhub would have created a business with a 45% share of the food delivery market in the U.S, catapulting the firms into a position to rival Doordash’s 45% market share. New York City Mayor Bill de Blasio’s move to cap delivery commissions at 10% was an early signal of regulators frustration following a drumbeat of stories over the lockdown about Grubhub’s move to set up shadow websites for restaurants, and fee-charging redirect phone numbers.

Tangent

The CMA is set to make a final ruling on its investigation into Amazon’s plan to buy a minority stake in London-based food delivery firm Deliveroo. The deal was provisionally cleared in April, with the CMA saying the pandemic was damaging Deliveroo’s revenues and the company could go bust without investment from the e-commerce giant. A final ruling is now due on August 6.

Big number

600 million. That’s how many annual food orders the combined company is expected to fulfill a year, with a total of 70 million customers. 

Further reading

Just Eat Agrees To $10 Billion Merger With Dutch Rival Takeaway.com (Forbes)

Billionaire Jitse Groen’s Takeaway.com Faces Unexpected Investigation Over $7 Billion Just Eat Merger (Forbes)

Uber’s Grubhub Play: A Desperate Bid To Save A Business Everyone Hates (Forbes)

UK watchdog extends deadline for final ruling on Amazon’s Deliveroo deal (Forbes)