PYMNTS-MonitorEdge-May-2024

Uber Sets Grubhub Value At $6B As Takeover Talks Go On

Uber Sets Grubhub Value At $6B As Takeover Talks Go On

Uber CEO Dara Khosrowshahi and Grubhub Founder and CEO Matt Maloney, who have known each other for years, are discussing the details of a potential merger or acquisition, The Wall Street Journal (WSJ) reported.

Like other mergers, the major impetus for the two food ordering and delivery business giants to become one is the enormous amount of money that would be saved from eliminating redundant functions, such as human resources, accounting, IT, marketing, sales and office administration.

But in this case, the potential for cost savings is more than $300 million, WSJ reported.

The companies are in talks about a takeover that would value Grubhub at $6 billion.

Under the terms of the deal, Grubhub’s stock would be set at around 1.9 Uber shares, or just over $60 per Grubhub share based on trading Wednesday, the news service reported.

At the start, Grubhub reportedly asked for 2.15 Uber shares for each of its own, but Uber rejected that number.

With Uber’s more sophisticated routing platform, Grubhub could save as much as $3 on each of the orders it delivers itself, which amounts to roughly half of its more than 500,000 daily deliveries, WSJ reported. Most of Grubhub’s orders are delivered by restaurants themselves, while nearly all of Uber’s are delivered by its drivers.

A deal could be a few weeks away, but one thing is certain: A potential merger of Uber and Grubhub would present the crowded food ordering and delivery sector with what could be an unbeatable combination.

According to PYMNTS’s Provider Rankings, which tracks mobile app markets monthly, Uber Eats and Grubhub have consistently placed in the top five, bested this month by DoorDash.

PYMNTS reported Wednesday (May 13) that a combined Uber Eats-Grubhub would control 55 percent of the nation’s meal delivery market, according to Wedbush Securities. Market tracker Second Measure found Uber-Grubhub would capture about 80 percent market share in New York City, 70 percent in Boston and 60 percent in Chicago.

If a deal is inked, the two companies are expected to face a regulatory challenge.

Sen. Amy Klobuchar of Minnesota and a former presidential candidate, said the potential deal raises serious concerns about the impact on customers at a time when they need food delivery services the most, WSJ reported.

PYMNTS-MonitorEdge-May-2024