GrubHub (NYSE: GRUB) has announced its upcoming merger with the European based Just Eat Takeaway (OTC: TKAYY). News of the merger with the Netherlands based firm comes amid a very public courting process by Uber Technologies (NYSE: UBER), where neither company could agree on favorable terms for a merger.
The courtship of GrubHub by Uber was a very public affair; Uber first made an offer to purchase its competitor back in May by means of an all-stock buyout, which would have seen GrubHub assimilated into Uber's Uber Eats division. At the time of the offer, GrubHub controlled a sizable 30% chunk of the gig delivery market, with Uber Eats trailing by 10%. Had the deal gone through, the combined Uber Eats-GrubHub giant would have accounted for half of the market in the United States alone.
GrubHub and Uber had long debated over a suitable price; at the time of the May offer, GrubHub was valued at $4.5 billion, and according to GrubHub's CEO Matt Maloney, Uber's offer was severely lacking. In the end, it came down to how much the competing suitors were offering per share, with GrubHub's offer being significantly more flattering than Uber's.
"[Just Eat's] offer was dramatically better. It was a much higher offer. It was a mid sixties offer versus a $75 offer. There was no comparison in terms of economics, there was no comparisons in terms of confidence to get the deal done and here we are and we can continue executing our aggressive financial competitive strategy and win," said Maloney while speaking with CNBC.
While GrubHub denied that the issue was related to antitrust concerns, it's hard to ignore the potential blowback of such a monumental deal. A 50% market share is a nightmare for antitrust regulators, so much so that just days after Uber floated its first deal, several U.S. senators sent a letter to the Depart of Justice's antitrust division urging an investigation into any potential transaction.
While GrubHub may have slipped away, Uber has plenty of other avenues to pursue to expand its market share, including other potential acquisitions. With a second round of coronavirus infections being reported and concerns mounting over a second wave of the pandemic, Uber Eats may be handed an opportunity to expand sooner rather than later.