Uber Reportedly Looking to Acquire Grubhub
During the current crisis, many businesses and verticals have seen their operations and sales directly impacted. The food delivery business has been no different, initially seeing a dip as shoppers stocked up on groceries but rebounding some as consumers looked to support their local eateries. All the while, companies like Uber Eats, Grubhub, DoorDash, and others have worked to reassure both customers and delivery partners with enhanced safety and cleanliness efforts. Amid these shakeups, it seems that two major players are now considering moving forward as one.
According to reports, Uber has approached Grubhub regarding a potential takeover offer. Sources tell the Wall Street Journal that the company best-known for its ridesharing service first made their pitch to Grubhub in February, with talks continuing since then. Most recently it is said that the latter company had proposed that Uber pay 2.15 of its shares per each Grubhub share, although that deal was apparently rejected.
The consolidation of Uber Eats and Grubhub would make them a more formidable force against rivals like DoorDash and Postmates. In fact Forbes notes that the combined company would control 55% of the food delivery market. That would best the current leader, DoorDash, which holds a 35% market share.
News of the potential team-up brought predictions and criticisms from observers. Among them, Wedbush Securities managing director Daniel Ives forecasts further consolidation, telling Forbes, “It’s all going to shake out over the coming 12 to 18 months. Should Uber buy Grubhub, a big ripple effect will happen. It would potentially be a catalyst to DoorDash and Postmates to have to get married as well.” Meanwhile Democratic Congressman David Cicilline, who represents Rhode Island’s first district, had some harsh words for both businesses, saying in a statement, “Uber is a notoriously predatory company that has long denied its drivers a living wage. Its attempt to acquire Grubhub — which has a history of exploiting local restaurants through deceptive tactics and extortionate fees — marks a new low in pandemic profiteering.”
Over on Wall Street, the idea of a deal seemed more welcomed as Grubhub shares closed up more than 29% on Tuesday. Uber Technology’s gains were more modest but managed a 2.4% rise for the day. With those figures, according to the Journal, Uber ended the session with a market cap of $56.2 billion compared to Grubhub’s $5.6 billion value.
While it’s unclear if talks between the two companies will produce a deal, it’s definitely an intriguing proposition. At the same time, it may not be as disruptive as some might assume. That’s because, while each platform does maintain some exclusive partners, many restaurants offer delivery through multiple platforms. Regardless it will be interesting to see what becomes of this potential takeover, how it’s received by regulators, and what it will mean for the rest of the industry if it comes to fruition.