
Just Eat Takeaway to acquire Grubhub for $7.3B - zoolander2
https://www.nytimes.com/2020/06/10/technology/uber-grubhub-just-eat.html
======
vikramkr
I read an article with some details from the Uber side on why that deal fell
through. I never thought I'd read an article where Uber seemed to be on the
ethical right side of things...

"Uber also believed it would would need to stop several undesirable business
practices from Grubhub, including phone charges and cybersquatting, or buying
domain names with the intent to profit from them. Grubhub has denied
cybersquatting in the past. "

[https://www.cnbc.com/2020/06/10/uber-exasperated-with-
grubhu...](https://www.cnbc.com/2020/06/10/uber-exasperated-with-grubhub-sale-
process-as-deal-slips-away.html)

~~~
ErikHuisman
Aah thuisbezorgd/takeaway does squad domains so grubhub will fit right in.

~~~
mcv
They do? I didn't know that.

I only know them from their Dutch branch Thuisbezorgd, which seems fairly
decent, and has contracts with connected restaurants. Quite recently they've
been under attack for abusing their near-monopoly (they do have Deliveroo and
Uber Eats as competitors, as well many independent restaurants; many connected
restaurants also have their own site) by raising their margins, putting
pressure on restaurants.

GrubHub sounds like the worst of the worst, so I was quite surprised to learn
they were bought by Thuisbezorgd's parent.

~~~
Avalaxy
I think this is an example: [https://www.afhaalrestaurantpikantochicken-
rotterdam.nl/](https://www.afhaalrestaurantpikantochicken-rotterdam.nl/)

Its a place that's on thuisbezorgd but has no own website. Just this shady
ridiculously long URL that is an exact copy of the thuisbezorgd page, with a
thuisbezorgd banner on it.

If we do a whois on the URL, the registrar is TAKEAWAY.COM (so thuisbezorgd)
who happens to have 90,237 more domains:
[https://whois.domaintools.com/afhaalrestaurantpikantochicken...](https://whois.domaintools.com/afhaalrestaurantpikantochicken-
rotterdam.nl).

------
crazygringo
Genuine question: why?

I completely understand acquisitions that create value by providing economies
of scale, monopoly power or network benefits, or diversify or complement a
company's activities.

But for a European market leader to buy an American market leader in what is
ultimately an extremely local business... I see no real added benefit here.

Few further economies of scale when you're already at continent-size for an
ultimately "local" business, no monopoly or network benefits, and zero
diversification.

If this were manufacturing or retail then benefits are pretty obvious.

But in this case, what am I missing? How on earth does this justify a 27
percent premium on GrubHub? It is purely a strategic defensive move to prevent
Uber from buying it, and nothing more?

~~~
bradleyjg
Mergers and acquisitions rarely work out for the entities as such. To
understand why they nonetheless continue to happen so often it’s necessary to
peer beyond the corporate veil and look at the incentives of the individual
players.

~~~
echelon
> Mergers and acquisitions rarely work out

Instagram

DoubleClick

NeXT

Here are some businesses off the top of my head that are thriving because of
their acquisitions.

~~~
tonyedgecombe
From [https://www.cbsnews.com/news/why-mergers-
fail/](https://www.cbsnews.com/news/why-mergers-fail/)

One KPMG study found that 83 percent of these deals hadn't boosted shareholder
returns, while a separate study by A.T. Kearney concluded that total returns
on M&A were negative.

~~~
JAlexoid
There's a presumption that companies engaged in M&A would have been executing
as well as historically.

Basically - it's an unscientific opinion

~~~
tonyedgecombe
Well that could go either way couldn't it.

------
alfalfasprout
Is it just me or are all these delivery apps pretty much the same thing, just
with different restaurants?

In SF at least Grubhub tends to have some of the more "typical delivery"
choices (pizza, chinese food, thai) and decent customer service, Doordash
seems to have the most variety but the dashers take their merry time on their
way to you (and customer service is nonexistent), Uber Eats is somewhere in
between grubhub and doordash in selection and has nonexistent customer service
(but at least give you a refund if something goes wrong), caviar has a smaller
selection but a lot of unique/higher end things (along with a terrible app but
OK customer service), and Tock is targeting the "high end at home" market.
There's also postmates which seems more expensive than the others for the same
exact restaurants (but seems to have more traction in LA).

At the end of the day, the search is really bad (clicking the healthy category
includes deep dish pizza and fried chicken on almost all the apps), the
drivers aren't adequately compensated so the customer experience is bad (your
driver might make 4 stops on the way to you and your food will be cold), and
the apps are slow and buggy.

I'm convinced that significant improvements in search, recommendations, adding
proper review support, and finding a way to not piss of restaurants in the
process will determine the winner in this battle. The differences in selection
are too small (in SF caviar which is owned by doordash and tock being the
exceptions) to really crown a winner on that front.

~~~
VWWHFSfQ
I prefer Grubhub/Seamless in NYC. They're typically on bicycles or scooters
and will bring the order up to your apartment door. Uber Eats people usually
want you to come down outside so they don't have to double-park.

I'm not giving you a $10 delivery tip to drive my Five Guys order eight
blocks.. You gotta get out and come up the stairs to my door.

~~~
replyguy912
or you could, ya know, walk 8 blocks and keep the restaurant in business, but
hey, we all have our limits.

~~~
greeniron
wait... this comment is confusing. how is he not contributing towards "keeping
the restaurant in business" by ordering delivery vs picking it up in person?

~~~
hedora
When you order through a delivery service, the restaurant is generally paid
less than their normal menu price, and none of the tips go to the kitchen
staff.

In addition to charging the restaurant, the delivery service charges the
customer a higher price than the restaurant would. They add delivery fees and
service fees. On top of that, the online menus in the delivery service apps
often have higher prices than the restaurant’s “real” menu.

Restaurants often negotiate special deals with the delivery services, so all
these details can vary. However, delivery app margins are much lower than
carry out or dine in margins.

~~~
sokoloff
When I go pickup food on my own, there’s still no tip money flowing to the
kitchen (or anyone else).

~~~
slfnflctd
Restaurants handle this issue in many different ways. I have been to several
who explicitly state that all tips are divided & shared among all employees,
and I think this is a good model. I've also seen one with a separate tip jar
for kitchen staff, which may be a better option in some places. Really, why
should the server make more than the cook or the dishwasher? Are they actually
working harder? [I know, their wages are often structured differently, but I
question whether they should be.]

------
saos
Wow. I thought Uber were going for it? The food delivery market share war is
really interesting.

For folks in the UK. The Competition Markets and Authority (CMA) delayed a
decision on whether Amazon could invest $500m in Deliveroo as of yesterday[1].
Deliveroo are more established in Europe but I can now see the CMA approving
Amazon investment into Deliveroo[2]. Why? Just Eat provided evidence to the
CMA recently on why the Amazon investment into Deliveroo could be problematic
[3]. Just Eat then go off to spend a $7b to secure the U.S market ahaha. In my
opinion Takeaway.com/Just Eat are now scrambling for marketshare.

Amazon tried to enter the food delivery market back in 2014-16 and they had
every right to![4]. But, competition pushed them out in my opinion. So now
Amazon are wanting to re-enter via investment into Deliveroo. It's very smart
move because Deliveroo service is pretty amazing already.

[1] Amazon/Deliveroo delayed decision:
[https://uk.reuters.com/article/deliveroo-ma-amazon/uk-
regula...](https://uk.reuters.com/article/deliveroo-ma-amazon/uk-regulator-
gets-more-time-for-final-ruling-on-amazons-deliveroo-deal-idUKL8N2DH4CB)

[2] Amazon/Deliveroo CMA inquiry: [https://www.gov.uk/cma-cases/amazon-
deliveroo-merger-inquiry](https://www.gov.uk/cma-cases/amazon-deliveroo-
merger-inquiry)

[3] Just Eat CMA inquiry response:
[https://assets.publishing.service.gov.uk/media/5ec27cc1e90e0...](https://assets.publishing.service.gov.uk/media/5ec27cc1e90e071e31153684/Just_Eat_Takeaway.com_N.V_180520.pdf)

[4] Amazon close food delivery business:
[https://www.engadget.com/2018-11-26-amazon-closes-
restaurant...](https://www.engadget.com/2018-11-26-amazon-closes-restaurant-
delivery-uk.html)

~~~
00deadbeef
Just Eat are getting too big. They destroyed Hungry House by buying it a few
years ago. This was before Deliveroo and Uber Eats were known to most people.
Seems like Just Eat are afraid of competition.

~~~
saos
I was not aware of Hungry House. but you're right! They purchased them too
[1]. Yeah it feels like a "screw it" lets do this type of move from
Takeaway.com/Just Eat. From my research it looks like Just Eat are threatened
by competition and re-entry into the market from Amazon. $500m investment
could really push Deliveroo on. I see similaries between Deliveroo and Amazon
in wanting to provide very quick delivery service.

[https://www.gov.uk/cma-cases/just-eat-hungryhouse-merger-
inq...](https://www.gov.uk/cma-cases/just-eat-hungryhouse-merger-inquiry)

~~~
disgruntledphd2
Well, the big difference between GrubHub/Just Eat and Deliveroo/Uber is that
the former were actually profitable software businesses, while the latter are
VC funded blitzscaling nonsense.

But now the profitable companies are forced to run unprofitable delivery
networks because of the VC funded (well public market funded for Uber now)
hype-train of on-demand.

Is there a Gresham's law for business models or something?

------
tybit
It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B
USD.

How does an all stock acquisition of 7.3B USD work in this case?

Is this done via issuing more than an extra 100% of stock on the expectation
the new asset will counteract the dilution to keep the stock price similar?

~~~
hayksaakian
1 example: they could take on debt from a Bank to make the purchase for
example.

"Just Eat Takeaway was created this year through the $7.8 billion combination
of two of the earliest participants in Europe’s food-delivery market, Just Eat
and Takeaway.com. It has been fighting competition in Europe from Uber Eats
and Deliveroo, a London-based company whose investors include Amazon.

Mr. Groen, a Dutch entrepreneur, founded Takeaway.com in 2000 when he was a
student frustrated with the challenge of ordering pizza online. He took
Takeaway.com public in 2016, and now has a net worth of more than $1.5
billion, according to Forbes.

In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German
portion of Delivery Hero’s business for about $1 billion in 2018."

They've been aggressively acquiring competitors for years, so this seems par
for the course.

~~~
grayfaced
I don't get it. Why would a bank loan billions to a company losing money, so
they can acquire another company losing money? The bank takes all the risk for
little return. At what point should the bank just become an investor.

~~~
jessaustin
Well probably the only "bank" involved was an investment bank. Typically they
would issue bonds rather than taking out a mortgage. Some investors like the
risk available with such corporate bonds.

Although this may not be a LBO situation, selling junk bonds is often the way
that PE firms steal everything from firms they "buy". I have no idea how the
"all-stock" claims jive with selling bonds. I suppose the buyer could just
issue more of its own stock, if the numbers don't add up. [EDIT:] This last
maneuver seems more plausible if the buyer itself was previously a LBO target
and the PE dudes haven't totally drained it yet.

------
adrr
So it's an all stock deal and it seems Grubhub purchase will be greater than
the market cap of Just Eat Takeway. How does that work? What about control of
the board?

Also seems strange that a $500mm revenue company is acquiring a $1.6bb
company. All the financials for just eats are terrible. I am so confused on
this acquisition and why shareholders approved.

------
foxes
Aren't all these delivery businesses living in a false vacuum? It seems like a
lot of these companies are basically a giant multivariate ponzi scheme.

------
jbj
I am a bit confused by the legal structure of this business: Article states
that just eat is dutch, but it is not based in the Netherlands. It is a UK
company that used to be based in Denmark. According to Wikipedia it recently
merged with Takeaway but is still operating as a subsidary with its own brand.

[https://en.wikipedia.org/wiki/Just_Eat](https://en.wikipedia.org/wiki/Just_Eat)

~~~
bluehatbrit
Just Eat was a UK based company which was public on the London Stock Exchange
(LSE). It was then bought out by Takeaway.com (Thuisbezorgd.nl) based in the
Netherlands and the company is now on the LSE (in the FTSE 100) and Euronext
Amsterdam.

Just Eat was originally founded in Denmark but moved to the UK

Just Eat was founded in 2000 in Denmark, then moved to the UK in 2005. It
floated on the London Stock Exchange in 2014 and acquired by Takeaway.com
(Thuisbezorgd.nl). It's now Just Eat Takeaway.com and trades on the LSE and
Euronext. The head office is in Amsterdam now as well, but the whole UK
engineering team is still in London and Bristol in the UK.

So the parent company is Just Eat Takeaway.com but then it's Just Eat in the
UK (and much of Europe), Takeaway.com in the NL (well, Thuisbezorgd.nl), and a
few other names around the globe like Menulog (AU/NZ), and Skip the Dishes
(CA).

~~~
jbj
Ahh, the name of the company flew over my head completely.

I read it as "Just Eat, takeaway" not as a concatenated company name which
apparently is "JET" on the LSE

[https://www.londonstockexchange.com/stock/JET/just-eat-
takea...](https://www.londonstockexchange.com/stock/JET/just-eat-takeaway-com-
n-v/company-page)

------
dep_b
I hate Just Eat in my country. For the life I couldn't get them to put VAT on
my receipt. Stopped ordering food almost completely because I was tired of
something simple like that failing over and over. Now they're slowly turning
into a monopoly, can't imagine how bad their service will get at that point.

------
dom96
My question: how is this allowed? Won't this create a massive monopoly?

I and many others had the same concerns when Just eat bought Hungry House. Now
we've got Deliveroo and Uber Eats too, but how can a smaller player survive
with these behemoths?

~~~
saos
> Won't this create a massive monopoly?

They wish. Just Eat are just using Grubhub as a way to enter US market. But,
theres already too many players in US. Doordash, Postmate, Grubhub, Uber Eats

------
obibring
Market consolidation would limit competition and hurt consumers so I'm glad
they were purchased by an external player. But local restaurants are still
hurting from exorbitant fees and something needs to be done to help.

Shameless plug: I'm working on a chrome extension that compares the price of
your order across delivery services to get you the best price. We'll soon be
linking to restaurants' websites to let people order direct and save on fees.
For those interested, link is here:
[https://platerapp.app.link/1VRKKwGAe7](https://platerapp.app.link/1VRKKwGAe7)

~~~
ngoldberg
I totally agree. By the way, I checked out the extension you are working on
and it’s amazing. This is a no brainer solution and I expect it to go viral.
Kudos on thinking about it and sharing it! Exciting...!

------
gridlockd
...in stock.

If you can give away $7 billion in stock, clearly your company must be worth
at least that much money, right?

This is a bullshit deal to drive up bullshit valuations for bullshit business
models looking for dumb money.

------
AgloeDreams
Lol...

These companies do realize that these numbers are incredibly not locked in
right? Like Grubhub's business could be taken in a week by any other app
because they don't own the endpoint, just the middleman. Sure they have some
exclusive deals but this is an incredibly inflated value for what is
effectively a API connection and little actual market ownership.

------
askafriend
I bet GrubHub realizes it can get an even bigger payday later on when either
Uber or DoodDash will _need_ to acquire it. That's probably why they didn't
want to consolidate with Uber immediately.

~~~
koolba
“DoodDash” sounds like the name of the company after a merger with Grindr.

------
nsxwolf
I can do the first part but I don’t think I can come up with the $7.3B

------
godzillabrennus
The value is in the transaction data they now capture with their own ordering
and delivery service.

Transaction data is the gold standard in building personalized marketing/ads.

------
zXuPh94rt
Just Eat is danish not Dutch. Close. It's somewhere in Europe.

~~~
guillermin
Actually, Just Eat was originally Danish and moved to UK in 2005, so it is
British.

In any case, the company they are talking about is "Just Eat Takeaway", which
is the result of the purchase by Dutch company Takeaway.com of British company
Just Eat in February 2020, so it is in fact Dutch.

------
tim_sw
This story is not yet over. There’s a decent chance that Doordash or Uber will
make a bid.

~~~
allworknoplay
Uber did make a bid, and these two signed an agreement. This is in the first
paragraph of the article ;)

~~~
tim_sw
Yup, I meant that they will put in a higher bid, or they might buy this new
combination. This area is strategically important for them, and if you’ve read
previous merger/M&A stories or books about them, this seems just like the
first salvo.

------
ThomPete
Just eat was originally Danish not Dutch

~~~
jbj
Just Eat was originally Danish.

Takeaway was originally Dutch.

Just Eat Takeaway is a Dutch company listed on London Stock Exchange since
February 2020.

[https://en.wikipedia.org/wiki/Just_Eat_Takeaway](https://en.wikipedia.org/wiki/Just_Eat_Takeaway)

~~~
ThomPete
You are right my bad. I didn't see the Takeaway part.

~~~
jbj
I made exactly the same mistake initially :)

