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Just Eat Takeaway snaps up Grubhub in $7.3bn deal, plots US expansion

Dutch food delivery app Just Eat Takeaway has agreed to buy US rival Grubhub in a $7.3bn (£5.8bn) deal that creates the world’s biggest food delivery company outside China.

The combination brings together a group with more than 70 million active customers who place close to 600 million orders a year.

Ride-hailing firm Uber had been in talks to buy Chicago-based Grubhub in February, but those discussions reportedly broke down over price and competition concerns. Share trading in Uber saw it close 4.8% down at $34.83 on Wednesday.

The deal, confirmed on Thursday, comes amid a surge in demand for deliveries of takeaway food as people stay home because of the coronavirus pandemic.

Competitive food delivery sector

However, competition is intense with such firms as Uber Eats, DoorDash and London-based Deliveroo all spending millions of dollars on marketing schemes to lure customers away from rivals.

Just Eat said its all-stock deal would value Grubhub at $75.15 per share, a 27% premium to its closing share trading price of $59.05 on Wednesday.

Just Eat Takeaway shareholders will control about 70% of the combined company, while Grubhub’s investors will own the rest. Just Eat stock was largely unmoved at 7,643p in London on Thursday.

Grubhub’s founder and chief executive, Matt Maloney, will join the Just Eat board and oversee the group’s operations in the US. Just Eat chief executive Jitse Groen will lead the business.

Just Eat in a hurry

“Combining the companies that started it all will mean that two trailblazing start-ups have become a clear global leader,” said Maloney in a statement.

He added: “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 favourite local restaurants in North America and around the world.”

Grubhub’s business model mirrors Just Eat, which primarily offers a marketplace for takeaway outlets to offer their own services. By contrast, Uber or Deliveroo use their own delivery networks to ferry meals to customers from restaurants, that often have no takeaway operations.

Just Eat Takeaway was created in April through the $7.8bn merger of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com, founded by Groen.

AJ Bell investment director Russ Mould said: “The ink is barely dry on the merger between Just Eat and Takeaway.com and now management are hungry for more deals. Snapping up Grubhub might strategically make sense as it expands the company’s reach, but there is a fear of indigestion by rushing to do another massive deal when arguably Just Eat and Takeaway.com won’t have had time to properly integrate.”

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Roger Baird

Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.