Uber loses out as Grubhub to merge with Europe’s Just Eat Takeaway

Uber loses out as Grubhub to merge with Europe’s Just Eat Takeaway
Source: Forbes

After nearly a month of negotiations, Uber was thought to be close to a deal to buy Grubhub in what would have combined two of the three largest meal delivery services in the United States.

But on June 10, Grubhub announced that it would instead be bought by Just Eat Takeaway, a European meal delivery competitor, for US$7.3 billion.

According to CNBC, talks between Uber and Grubhub stalled partly due to antitrust concerns raised over the potential acquisition, which would have seen Grubhub combine with Uber’s meal delivery service, Uber Eats, in what would have represented around 55% of the meal delivery market share in the US.

With people forced to stay home as a result of the coronavirus pandemic, demand for delivery has soared to new heights over the past few months, making Uber Eats a bright spot for the company at a time when Uber’s ride hailing service has suffered.

People familiar with the matter told CNBC that Uber disagreed with Grubhub about “how to characterize regulatory risk.”

Washington lawmakers had already expressed concern that a merger between the two services would create something of a monopoly.

Shortly after news of talks between Uber and Grubhub leaked, Democratic Senators Amy Klobuchar, Patrick Leahy, Richard Blumenthal and Cory Booker wrote a letter urging the Department of Justice and the Federal Trade Commission to monitor the potential acquisition.

The concerns over a potential Uber deal are part of a broader push from US lawmakers to raise antitrust scrutiny on large companies trying to exploit the coronavirus pandemic to amass greater market share, as many smaller competitors have crumbled under the pressures brought by the outbreak.

CNBC also reported that Uber had some concerns about Grubhub’s business practices, such as charging restaurants exorbitant fees and buying up the web domains of restaurants that it works with in order to charge them a commission on orders.

Just Eat Takeaway’s proposal is likely to draw far less scrutiny from US and European regulators than a deal with Uber, since the European company doesn’t have a presence in the US.

Just Eat Takeaway itself is the result of a recent US$7.8 billion merger between two of the earliest meal delivery services in the European market, Britain’s Just Eat and Netherlands-based Takeaway.com.

Grubhub’s CEO Matt Maloney has since said that his company’s decision was due to Just Eat Takeaway’s having made a better offer, not any antitrust concerns.

But Uber’s failure to acquire Grubhub has dealt a blow to the company’s attempts to grow and consolidate the meal delivery market.

“Like ride-sharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants,” an Uber spokesperson told CNBC.

“That doesn’t mean we are interested in doing any deal, at any price, with any player.”

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