Dive Brief:

• Amsterdam-based food delivery company Just Eat Takeaway.com entered into an all-stock transaction with Grubhub, the companies announced Wednesday.
• Grubhub shares jumped 7% during after hours trading on news of the deal, which is expected to close in Q1 2021. Grubhub's shares traded at $59 per share at market close Wednesday, translating to a $5.4 billion market cap. Through this business combination, Grubhub will maintain its market share as one of the top three food aggregators in the U.S.
• This combination pushes Uber out of the running, which was reportedly also considering an all-stock deal with Grubhub, but the two disagreed over share purchase price and received initial pushback from lawmakers over antitrust issues related to a merger of two of the largest food delivery companies in the U.S.

 Dive Insight:

The deal concludes a whirlwind few weeks of M&A speculation that began in May with rumors that Uber was in talks to buy Grubhub. The disagreements between the two delivery platforms, including squabbling over a break-up fee related to potential antitrust issues, gave Just Eat Takeaway an opportunity to step in with a deal that is less likely to result in significant regulatory actions. It will also represent an implied value of $75.15 for each Grubhub share, for a total equity consideration of $7.3 billion. This is stronger than Uber’s proposition, which would have valued Grubhub at $62.50 per share for a total of about $6 billion. 

The combined company will be one of the few profitable players in the space, together processing about 593 million orders in 2019 with over 70 million combined active customers around the world, according to the press release. Matt Maloney, CEO and founder of Grubhub, will join the Just Eat Takeaway management board and lead the company’s North America business with the combined company’s North American headquarters in Chicago. 

While this deal will allow a European company to gain a large footprint in the U.S., it likely won’t disrupt the current market pecking order the way consolidating two top U.S. players would have. A combined Grubhub/Just Eat Takeaway will be more diversified and not heavily reliant on the U.S. like DoorDash and Postmates, and will also be able to grow its presence in North America, where Just Eat Takeaway’s subsidiary Skip the Dishes has a strong presence in Canada. Uber Eats will be the new company’s strongest competitor, since it also has a global reach and a strong presence in Europe. 

But unlike Uber Eats, which has been leaving municipalities where it can’t be No. 1 or No. 2 in market share, Takeaway has been a particularly active acquirer. It completed its merger with Just Eat in 2019. It also acquired Delivery Hero’s food delivery operations in Germany, Foodarena in Switzerland, BGmenu in Bulgaria and Oliviera in Romania all in 2018. Just Eat Takeaway’s acquisition of Grubhub shows that consolidation of the food delivery business could very well be a consolidation worldwide that won’t leave U.S. companies off the table.