Uber-Grubhub marriage is off the table after a European swoops in with $7.3B
Speak now or forever hold your pizza... Back in May, Uber was courting Grubhub for an engagement that would marry the two food delivery giants into a market leader (surpassing DoorDash) — now a European stud has swooped in to steal Uber's thunder.
- Intercontinental: American Grubhub is merging with European delivery giant Just Eat Takeaway.com — if you think that's a mouthful, that's because the European company was itself formed out of a merger.
- Confirmed threesome: In January, British food deliverer Just Eat merged with Dutch rival Takeaway.com in an $7.6B deal — now, the merged company is eating up Grubhub for $7.3B. Combined, they'll have 70M global active customers.
Parents prefer this marriage... US regulators aren't so thrilled about the consolidations coming out of the hyper-competitive delivery wars (where the best promo code wins).
- Uber pulled out of the deal talks because of antitrust concerns — Uber and Grubhub reportedly couldn't agree on who would shoulder most of the risk in the likely scenario that regulators got involved.
- A marriage with Just Eat solves this problem. Since the company doesn't have a US presence, the antitrust risk is much lower. JustEat and Grubhub aren't currently competing in the same market, so their merger doesn't hurt competition.
- BTW — Just Eat’s market value is over 3X that of Grubhub’s ($16B to $5.4B).
This defeats the purpose of the consolidation plan... Grubhub and Uber hoped to merge to reduce aggressive price competition (and "promiscuous" customers). But the Just Eat/Grubhub merger combines two leaders in separate markets — domestic competition stays the same. No delivery fee-jacking is expected as a result of this deal. This merger is more about cost synergies (lowering duplicate costs) than revenue ones (being able to increase prices).