Uber Loses Grubhub to Just Eat

Food delivery services

Uber was not able to crack a deal with other food delivery companies. The deal would have been profitable for Uber’s food delivery business. The demand for Uber’s food delivery business increased during the pandemic. 

However, instead of Uber another Netherland based company, Just Eat confirmed that it has managed to make a deal with Grubhub. 

The all-stock deal values Grubhub at $7.3 billion. In after-hours trading, the company’s shares increased to 6%. 

Deal Breakers

The Netherland based company is operating in 23 countries. The company’s shareholders will approve the merger between both the companies and will be finalizing the deal by early next year. This will be the first time that Just Eat Takeaway will be operating in the United States. 

Just Eat Takeaway.com in a statement said they were “In advanced discussions with Grubhub regarding an all-share combination.” 

CNBC and the Wall Street Journal reported the deal could be struck as early as Wednesday, with CNBC reporting that Uber “is likely” to pull out over anti-trust concerns, citing two people familiar with the matter. 

Uber was discussing an acquisition offer with Grubhub at the start of the year before the pandemic outbreak. Both the companies were discussing a potential deal and were supposed to be finalizing the deal as soon as May. 

Uber’s food delivery demand was increasing in the lockdown. But, its ride-hailing business was having low demand as people were staying at home. Uber’s ride demand is down by 80% whereas Uber Eats has flourished since the COVID-19. 

Shortly after the reports about Uber and Grubhub, Democratic Senators. Amy Klobuchar, Patrick Leahy, Richard Blumenthal, and Cory Booker wrote a letter urging the Department of Justice and the FTC to “monitor the negotiations” and “to initiate an investigation if the parties reach an agreement to merge.” 

Uber spokesperson Noah Edwardsen in a statement said, “Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn’t mean we are interested in doing any deal, at any price, with any player.” 

Grubhub

Grubhub was launched in 2004. The sole purpose of the company was to deliver food to customers on demand. However, it had to face severe competition in the market from companies like Uber, DoorDash, and Postmates.

Actions Taken by Uber

As it is not sure when the business will recover from the adverse impression of the pandemic. The company is focusing to get Uber Eats more profitable in the same way they did for their rides, but this will take time. The profit they are getting from their food delivery platform is not substantial enough to meet the expenses. 

Uber has taken some difficult decisions and the company laid off further 3000 employees and thanked the employees for their contribution towards the firm. The company is focusing not to rely on investors instead of cope up with its own self. 

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