Just Eat confirms merger talks with Grubhub

Edmund HeaphyFinance and news reporter
Yahoo Finance UK
Just Eat recently merged with Takeaway.com to form Just Eat Takeaway.com. (Alex Burstow/Getty Images)
Just Eat recently merged with Takeaway.com to form Just Eat Takeaway.com. (Alex Burstow/Getty Images)

Just Eat Takeaway.com (JET.L) confirmed on Wednesday that it is in advanced discussions with US food delivery giant Grubhub (GRUB) about an all-share merger.

The discussions come amid increasing uncertainty about a possible merger between Uber (UBER) and Grubhub, after US lawmakers pushed antitrust officials to investigate the potential deal.

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The merger between Just Eat Takeaway.com and Grubhub would create a transatlantic food delivery powerhouse, and would represent a further coup for Jitse Groen, the chief executive of Just Eat Takeaway.com.

Groen, 42, who founded Takeaway.com from his dorm room at the University of Twente in 2000, has long made clear his ambition to rule supreme in the global food delivery sector.

Just Eat Takeaway.com, the result of a previous £6.2bn ($7.8bn) merger between London’s Just Eat and Amsterdam’s Takeaway.com, is one of the dominant food delivery platforms outside of the US.

The UK’s Competition and Markets Authority in April approved the merger between the two food delivery firms, around eight months after they first confirmed that they were engaged in talks.

The deal, structured as an acquisition by Takeaway.com, came after a months-long battle between the Amsterdam-based firm and rival bidder Prosus (PRX.AS), which is owned by South African’s Naspers.

READ MORE: Regulator approves £6.2bn Just Eat and Takeaway.com merger

Prosus and Takeaway.com traded increasingly acrimonious barbs about their respective bids. Prosus claimed that the combination of Just Eat and Takeaway.com would be “highly value destructive,” arguing that its all-cash offer would create better value for shareholders.

Shares in Just Eat Takeaway.com fell by more than 12% on Wednesday following the confirmation of the talks.

Uber shares had earlier fallen following a CNBC report that suggested the company was likely to withdraw from merger talks with Grubhub due to antitrust concerns.

In a letter to the US Justice Department and Federal Trade Commission, several Democratic senators, including former presidential candidates Amy Klobuchar and Cory Booker, argued that the tie-up would “raise serious competition issues in many markets around the country.”

Because JustEat Takeaway.com does not currently operate in the US and Grubhub does not in Europe, the deal is unlikely to raise competition concerns.

Though many restaurants have switched to offering takeaway food during the coronavirus pandemic, the crisis has not been a major boon for food delivery firms.

READ MORE: UK recession to be worse than France, Italy, Spain, and Germany, warns OECD

After seeing an initial dip in orders as countries around Europe implemented lockdown restrictions, Just Eat Takeaway.com said that demand simply returned to pre-crisis levels.

Grubhub, meanwhile, said its corporate delivery business had been dented by firms telling their employees to work from home. It also declined to issue revenue guidance for its second quarter, citing uncertainty.

Just Eat Takeaway.com has yet to issue financial results following the April merger, but previously said that the combined company would have posted a loss of €43m ($48.5m) in 2018, based on revenue of €1.21bn ($1.37bn).

In is 2019 financial year, Grubhub lost $18.6m, based on revenues of $1.3bn.

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