European on-demand food delivery company Just Eat Takeaway has confirmed that it has reached a merger agreement with US rival Grubhub. The Netherlands-based company revealed that it will be acquiring Grubhub through an all-stock deal with an enterprise value of $7.3 billion.
Under the deal, Grubhub shareholders will receive American depositary receipts (ADRs) that are equivalent to 0.671 Just Eat Takeaway ordinary shares for each Grubhub share. Based on the closing price of Just Eat Takeaway's shares on Tuesday, the deal values Grubhub's stock at $75.15 per share.
Grubhub's chief executive officer and founder, Matt Maloney, will be joining Just Eat Takeaway's management board and will head the company's operations across North America. Just Eat Takeaway's chief executive, Jitse Groen, will continue to head the company's global business.
Groen mentioned in a statement that the merger represents the teaming up of two veterans of the industry. Both Groen and Maloney established their respective businesses at the turn of the century and were the first to engage in the food delivery business before it became mainstream. Groen stated that the combined company will be the world's largest food delivery business outside of China, with over 70 million active customers worldwide.
Maloney echoed the same sentiments as Groen, stating that both of them have known each other since 2007. He added that he founded Grubhub before the industry even existed in the US. Today, the company is one of the biggest food delivery operators in the continent and the merge will likely result in its further growth.
Before the agreement, Grubhub had previously been in talks with a possible merger with Uber's food delivery division. The negotiations had lasted for almost a year but both companies had failed to reach an agreement. According to sources familiar with the matter, negotiations had mostly collapsed due to Uber Eats' concerns over antitrust issues and added regulatory scrutiny.
Uber had stood by its claims that a consolidation of the US' food delivery operators was the best way to reach profitability. In a statement, Uber stated that consolidation was the only way for the industry to reach its full potential while providing the best service to both restaurants and consumers. Apart from Uber Eats, Just Eat, and Grubhub, other major players in the industry include Doordash, Postmates, and Deliveroo.
Following the announcement of the deal, Grubhub's shares surged by as much as 9 percent in after-hours trading. Meanwhile, Just Eat Takeaway's shares dropped by 10.79 percent.
