Delivery giant Just Eat Takeaway today confirmed it is in advanced talks to buy Grubhub, in a bid to establish itself as a major rival to Uber in the US.
Netherlands-based Just Eat Takeaway said it is “advanced discussions with Grubhub” for an all stock-purchase of the company.
Grubhub, a US food delivery startup with operations in London, has a market value of $5.2bn (£4.1m).
UK firm Just Eat was bought by Dutch rival Takeaway.com earlier this year in a deal worth $7.8bn. Just Eat Takeaway is now worth €12.6bn (£11.2bn).
Grubhub has been involved in merger talks with Uber since May, but the ride-hailing firm is now “likely” to pull out of negotiations after US politicians voiced antitrust concerns with the potential deal, CNBC reported.
Last month Uber posted a net loss of $2.9bn alongside 3,700 redundancies for the first three months of 2020 as coronavirus sparked international lockdowns.
Meanwhile Uber Eats, the company’s food delivery arm, reported a 20 per cent jumping sales for the same period as people stayed indoors.
Uber Eats chief executive Dara Khosrowshahi last month announced the firm will pull out of some markets, including Ukraine and Egypt, in order to “invest aggressively” in countries where it is confident it can maintain market lead.
Softbank-backed Doordash remains the first choice in the US at the moment, with almost 50 per cent of takeaway orders made using the startup.
Grubhub investors welcomed the news, with shares up 0.4 per cent to $58.2 at 5PM BST. But investors of London-listed Just Eat Takeaway were less cheered, with shares plummeting as much as 20 per cent to 7,928p at 4PM, before recovering slightly to 7,626p at 5PM.
“Judging by the share price moves, this is more likely to be a takeover by Just Eat of Grubhub with the former’s share price down as much as 20 per cent following the announcement, while the latter has reacted more modestly,” said Helal Miah, investment research analyst at The Share Centre.
“Should this go ahead, then it will give Just Eat a foothold in the huge American market through an already established player while Uber may have to look overseas themselves for another partner,” he added.
“This news will not sit comfortably with others in the sector and we may see rivals such as Deliveroo throw their hand in or look elsewhere to shore up their market share.”