Just Eat to acquire rival Grubhub

August 2020 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

August 2020 Issue

After months of speculation regarding its future, US food delivery company Grubhub is to be acquired by Amsterdam-based firm Just Eat Takeaway.

The all-stock transaction gives Grubhub shares an implied value of $75.15, implying a total equity value of $7.3bn on a fully diluted basis. The companies expect the deal to close in the first quarter of 2021, pending shareholder and regulatory approval. Once completed, Grubhub’s shareholders will own 30 percent of the combined group.

The merger will create the world’s largest online food delivery company outside of China, measured by gross merchandise value (GMV) and revenues. The combined firm will have more than 70 million active customers who place close to 600 million orders a year. The deal would create “a company built around four of the world’s largest profit pools in food delivery: the US, the UK, the Netherlands and Germany”, the companies said in a joint statement. The combined company will be headquartered in Amsterdam.

The merger comes after talks between Grubhub and Uber failed as their potential merger faced considerable antitrust scrutiny in the US, where the proposed merger would have combined two of the three largest food delivery companies in the country. The merger of Just East and Grubhub is not expected to garner as much regulatory attention.

Uber offered 1.925 shares for each Grubhub share, valuing Grubhub at a volume weighted average price of about $70 per share. Just Eat offered 0.67 shares for each Grubhub share.

“Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents,” said Jitse Groen, chief executive and founder of Just Eat Takeaway.com. “Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector. 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.”

“When Grubhub and Seamless were founded, the online takeout industry didn’t exist in the US,” said Matt Maloney, chief executive and founder of Grubhub. “My vision was to transform the delivery and pick-up ordering experience. Like so many other entrepreneurs, we started modestly – restaurant by restaurant in our Chicago neighbourhood. Today, Grubhub is a leader across North America. I’ve known Jitse since 2007 and his story is much like mine. Combining the companies that started it all will mean that two trailblazing start-ups have become a clear global leader. 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. We could not be more excited.”

Mr Maloney will join Just Eat’s management board and will lead the combined business in North America. Two Grubhub directors will join Just Eat’s supervisory board, the companies also confirmed in a statement.

The deal comes less than six months after Takeaway.com won a fierce £6.3bn bidding battle to buy Just Eat, at a crucial time for the food delivery industry globally. There has been a surge in demand for deliveries of takeaway food as people have stayed at home during the COVID-19 pandemic. Prior to the coronavirus outbreak, taken together Just Eat Takeaway and Grubhub last year reported total revenues of $3bn and a profit of $447m. Further consolidation is expected within the industry in the coming years.

Richard Summerfield