Just Eat To Buy Grubhub In $7.3 Billion Deal

Just Eat agreed on Wednesday (June 10) to buy Grubhub for $7.3 billion in a move that could result in the world's largest online food delivery firm outside of China, with operations in 25 countries.

The companies said in a statement that the merged entity will focus on popular sectors for food delivery, including the United States, United Kingdom, Germany and the Netherlands.

Once the deal is completed, Grubhub CEO and Founder Matt Maloney will join Just Eat's board of directors, where he will lead the business in North America. Two other Grubhub directors will also be joining the board.

The transaction is still subject to the approval of the shareholders of both companies and other conditions customary for such deals. If everything is approved, the deal will take effect in the first quarter of 2021.

The new combined company will be headquartered in Amsterdam, along with a North American headquarters in Chicago and a "significant presence" in the U.K., the press release says.

Just Eat saw Grubhub's success in the North American market and the compatibility in business models, since both are EBITDA positive. And since Just Eat owns Canada-based SkipTheDishes, the merger with Grubhub will create a large base of operations in North America, according to the companies.

Jitse Groen, CEO and founder of Just Eat, said he felt a similarity existed between himself and Grubhub CEO Matt Maloney.

"Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector. I am excited that we can create the world’s largest food delivery business outside China," he said.

Maloney remembered starting from the beginning before food delivery had become a widespread trend, and said the acquisition would be good for both companies.

"Combining the companies that started it all will mean that two trailblazing start-ups have become a clear global leader," he is quoted as saying. "We share a focus on a hybrid model that places extra value on volume at independent restaurants driving profitable growth."

Under terms of the deal, Grubhub shareholders will receive American depositary receipts (ADRs) representing 0.6710 Just Eat ordinary shares in exchange for each Grubhub share. That represents a value of $75.15 for each Grubhub share, for a total equity consideration of $7.3 billion. That's about a 27 percent premium from Grubhub's $5.4 billion market capitalization and $59.05 share price at Wednesday's market close before the companies announced the deal. Once the deal became public, Grubhub shares rose another 5.4 percent to reach $62.18 shortly after 7 p.m. ET in after-hours trading.

Grubhub shareholders will be entitled to ADRs upon completion of the deal, which will add up to around 30 percent of the total for the company, the companies said.

Uber Eats was among the suitors for Grubhub, which began looking for possible buyers at the beginning of the year. However, word emerged earlier Wednesday that that deal was falling apart.



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