Dive Brief:

• European food delivery companies Just Eat Takeaway and Delivery Hero are reportedly interested in a deal with Grubhub, according to CNBC, which cited people familiar with the matter as sources. 
• Grubhub and Uber are reportedly still in discussions about a deal, but have been mulling a breakup fee following growing antitrust concerns, according to Bloomberg.
• Just Eat Takeaway and Delivery Hero declined requests to comment on the reports from Bloomberg and CNBC, but Delivery Hero told CNBC, “Being a global leader in the delivery industry, we are regularly looking at potential transactions to evaluate new opportunities.” 

Dive Insight:

The latest rumors of potential suitors for Grubhub show that consolidation in the industry is inevitable. While talks allegedly continue among Uber and Grubhub over a rumors of a deal that began swirling last month, lawmakers have already come out against a possible merger, which could make receiving regulatory approvals difficult.

While Grubhub doesn’t comment on specific market rumors, it said previously that it believes consolidation could make sense for the industry and is looking into value-enhancing opportunities. Given the potential complications with an Uber deal, it makes sense that it could be entertaining other would-be acquirers. 

A deal with either Just Eat Takeaway or Delivery Hero would not likely endure the same amount of antitrust scrutiny, as there would still be four top food delivery companies in the U.S. versus three. A deal with Grubhub would also allow both European companies to enter into the U.S. food delivery market, which Just Eat has tried to do in the past. Last year, the platform had to pull its subsidiary SkipTheKitchen out of its markets in New York, Ohio, Missouri and Nebraska. A new entrant to the U.S. market would mean that domestic competition wouldn't wane as much as it would following an Uber/Grubhub deal. 

Either of these companies would be tough competition. Just Eat Takeaway became one of the largest global food delivery companies after the two companies merged in a $7.6 billion deal that closed in April while also raising $756 million in additional funding. Delivery Hero has also raised billions in capital over the years, according to TechCrunch. Companies flush with capital, despite ongoing issues within the industry over profitability, are more likely to have the resources to purchase other companies to grow market share and profitability. 

Whether these rumors are true, Grubhub could be a desirable acquisition, especially since it is U.S. delivery aggregator among the top four companies that is profitable. Its scope is large, its brand is well known and it dominates the coveted New York City market. Investors are also on board with potential deals. Each time news of a deal has emerged, Grubhub’s stock price has increased.