Just Eat Takeaway's Grubhub grab tests expansion appetite

Thursday, June 11, 2020
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AMSTERDAM/LONDON (Reuters) - Just Eat Takeaway's proposed $6 billion takeover of Grubhub to create a trans-Atlantic giant that could thwart Uber's food delivery ambitions has raised concerns among some analysts about the pace of the European company's expansion.

Buying Grubhub would see Jitse Groen, Takeaway's 42-year-old CEO, become head of the world's biggest food delivery business outside China, ahead of Uber Eats, which walked away from buying the U.S. firm.

Groen has only just had British antitrust approval for Takeaway's all-share acquisition of larger Just Eat, which beat a rival cash bid from tech giant Prosus.

"It'll be biting off far more than it did when acquiring Just Eat (only last year!), but the playbook will be the same," Jefferies analyst Giles Thorne said in a note to clients, saying the bid was "another opportunistic cross-border land grab".

Graphic: Takeaway M&A deals since late 2018, https://fingfx.thomsonreuters.com/gfx/buzz/dgkplwewbvb/Pasted%20image%201591862687383.png

Groen, who started Takeaway in his dorm room in 2000, is betting that online food ordering is a "winner-take-most" market, as the more restaurants sign up to one platform, the more likely customers are to use it.

Shares in Just Eat Takeaway were 0.1% lower at 85.40 at 0936 GMT, after closing more than 13% lower in Amsterdam on Wednesday after it disclosed talks with Grubhub, with the proposed deal announced after the market close in New York.

Takeaway said the deal was worth $7.3 billion at its closing price on Tuesday. But the fall in its share price meant the offer valued Grubhub at closer to $6 billion on Thursday.

Grubhub shareholders would receive $65.24 per share at current prices, a premium of 10% to its closing price on Wednesday. However, the U.S. company's shares had risen 21% in the year to date amid talks with Uber.

Takeaway bought the German operations of Delivery Hero at the end of 2018, ending a bruising fight for market dominance.

In a trading update on Wednesday, Takeaway said order growth was up 41% in April and May from the same period a year ago, as the coronavirus outbreak led to a surge in use of online food services. Grubhub said its orders were up 23%.

(Reporting by Toby Sterling; Editing by Catherine Evans and Alexander Smith)