A transatlantic heavyweight is emerging in the food delivery business.
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The British-Dutch company Just Eat Takeaway.com takes over the US rival GrubHub. This means that Uber, the driver who acted as a likely buyer of GrubHub, is not getting a move. According to US media reports, the German competitor Delivery Hero is also showing interest.
Just Eat Takeaway wants to pay the purchase price entirely in own shares and accepts a premium of 27 percent on the recent closing price of GrubHub. The companies agreed on $ 75.15 per share, as announced after the US market closed Thursday night. GrubHub will be valued at around 7.3 billion dollars (6.4 billion euros) when the takeover takes place.
According to the company, the merger will create the largest food delivery company outside of China. The transaction is expected to close in the first quarter of 2021.
Investors reacted to the planned takeover with mixed feelings
GrubHub stock reacted on Thursday in NYSE trading with an increase of 4.64 percent to $ 61.75, but was well below the $ 75.15 offered.
One reason could be the planned payment in shares of Just Eat Takeaway. Many investors prefer cash when taking over.
Analyst Hubert Jeaneau from the major Swiss bank UBS also referred to the tough competition in the food delivery market. However, the US market in particular also offers plenty of opportunities. Just Eat Takeaway shareholders also seem to see positives and negatives. The stock price fluctuated between gains and losses on Thursday. Recently, the papers fell by around half a percent.
According to media reports, rival Uber had already initiated takeover talks with GrubHub in February. Because: The travel agent wants to expand its delivery offer Uber Eats. Food delivery business is booming, especially in the Corona crisis. A merger of GrubHub and Uber Eats could have failed due to competition concerns, however, because both are primarily active in the US market. This problem should not exist now, since Just Eat Takeaway is not represented there at all.
After the deal was announced, Uber said the industry needed consolidation. “It doesn’t mean that we’re interested in every deal, at every price, with every player.” According to previous media reports, Uber is said to have offered $ 68 per GrubHub share.
According to information from the “Financial Times”, Uber had already tried to take over the GrubHub rival DoorDash last year, but flashed off. Even after GrubHub swallowed several competitors like Eat24 or Foodler, the company is still smaller than DoorDash in the US market.
Just Eat Takeaway itself was only created in spring, also through a merger. The Dutch company Takeaway took over the British competitor Just Eat.
After the heavy losses the day before in the wake of the impending takeover of the US food delivery service GrubHub, Just Eat’s Takeaway.com paper finally gave way on Thursday. Market participants see risks.
At Euronext, the shares of the British-Dutch company were initially turned positive after a weak start, but then returned their profits and closed 3.8 percent in the red. Just Eat Takeaway.com’s paper had reacted to the official announcement of takeover talks the previous day with high price losses in the double-digit percentage range.
The deal was announced in the night of Thursday. Just Eat Takeaway and Grubhub agreed on a purchase price of $ 75.15 per share. Grubhub is valued at approximately $ 7.3 billion when the acquisition. Just Eat is thus paying a premium of 27 percent on the latest pit lift closing price. Grubhub’s papers recently rose in New York by around five percent.
According to the company, the merger will create the largest food delivery company outside of China. Actually, the travel agent Uber with his service Uber Eats was considered the favorite for a takeover of the mine, according to US media, the German competitor Delivery Hero is also said to have shown interest.
On Thursday, Delivery Hero’s stocks closed only slightly in a very weak overall market. Analysts had previously described the likelihood of Delivery Hero expanding into the US market as low. They only made further advances in Asia at the end of last year and secured the majority in South Korean Woowa.
The experts were initially initially surprised by the Just Eat grubhub deal. The potential for synergies is limited and the market is very competitive, wrote Hubert Jeaneau from the Swiss bank UBS. Just Eat Takeaway has to invest a lot here, with an uncertain result. On the other hand, the US market also offers great opportunities.
JPMorgan analyst Marcus Diebel argued similarly. Barclays was also surprised to find a European food delivery service venturing into the US market. Expert Giles Thorne of Jefferies wrote that convincing Just Eat Takeaway.com shareholders of the deal shouldn’t be an easy task.
/ hbr / DP / he
AMSTERDAM / CHICAGO (dpa-AFX)
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