The merger between Uber Technologies Inc. and Grubhub will likely be taken off the table over antitrust concerns raised with the potential deal, sources told CNBC.
Instead, Grubhub is reportedly finalizing a deal to merge with Netherlands-based Just Eat Takeaway.com.
It’s unclear why the merger negotiations broke down between Uber and Grubhub because none of the parties are talking. But last month, Democratic lawmakers questioned the possible deal between the two online food ordering and delivery platforms.
A letter to the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission from Sens. Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt.), Richard Blumenthal (D-Conn.) and Cory Booker (D-N.J.) expressed concerns over the deal, which would create a new market leader in the U.S. online delivery space over rival DoorDash and urged the agencies to investigate the deal.
“A merger of Uber Eats and Grubhub would combine two of the three largest food delivery application providers and raise serious competition issues in many markets around the country,” the letter dated May 20 said. “As our country grapples with the many health and safety challenges brought about by the coronavirus (COVID-19) pandemic, many consumers have turned to food delivery apps to order meals online, and many restaurants have come to rely on the business they get through these apps to stay afloat.”
Even before the merger talks between Uber and Grubhub came into play and the COVID-19 pandemic turned most restaurants into takeout places, competition in the food delivery sector had already started heating up, PYMNTS reported. As a result, Grubhub sought a buyer as its market share dipped. At the time, DoorDash, Uber Eats and Postmates were considered to be the primary contenders to buy the company.
Last week, PYMNTS reported there was another obstacle in Uber’s bid to buy Grubhub: the food-delivery service was looking for a big payoff if federal regulators rejected the deal.