Uber lost out on its pursuit of Grubhub

Uber has lost out on a high-profile deal that would have given a big boost to its food delivery business that has seen surging demand during the pandemic.

Weeks after reports that Uber was in discussions with Grubhub about a possible merger, a Netherlands-based company, Just Eat Takeaway.com, confirmed Wednesday that it has struck a deal with Grubhub.

The all-stock deal values Grubhub at $7.3 billion. Its shares jumped 6% in after-hours trading.

The merger, which is subject to approval by the companies’ shareholders and is anticipated to close early next year, will mark Just Eat Takeaway’s entrance into the US. The company currently has operations in 23 countries.

Earlier Wednesday, Just Eat Takeaway.com said it was “in advanced discussions with Grubhub regarding an all-share combination.” CNBC and the Wall Street Journal reported the deal could be struck as early as Wednesday, with CNBC reporting that Uber “is likely” to pull out over antitrust concerns, citing two people familiar with the matter.

Uber reportedly approached Grubhub (GRUB) earlier this year with an acquisition offer before the pandemic led to widespread lockdowns and the companies continued to discuss a potential deal, according to a report last month from The Wall Street Journal, citing sources familiar with the matter. Bloomberg reported at the time that a deal could be reached as soon as May.

NEW YORK, NEW YORK - MAY 31: A delivery driver wearing a mask rides past street art on May 31, 2020 in New York City. Government guidelines encourage wearing a mask in public with strong social distancing in effect as all 50 states in the USA have begun a gradual process to slowly reopen after weeks of stay-at-home measures to slow the spread of COVID-19. (Photo by Alexi Rosenfeld/Getty Images)

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With skyrocketing demand for delivery during the coronavirus pandemic, Uber’s meal service, Uber Eats, has been viewed as a bright spot for the company at a time when its core ride-hailing business has declined due to people increasingly staying home.

Shortly after the reports about Uber and Grubhub, Democratic Sens. Amy Klobuchar, Patrick Leahy, Richard Blumenthal and Cory Booker wrote a letter urging the Department of Justice and the FTC to “monitor the negotiations” and “to initiate an investigation if the parties reach an agreement to merge.”

In a statement Wednesday afternoon, Uber spokesperson Noah Edwardsen said, “Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn’t mean we are interested in doing any deal, at any price, with any player.”

Grubhub was founded in 2004 and helped popularize the concept of meal deliveries. In recent years, however, the company has faced fierce competition in the market from the likes of Uber, DoorDash and Postmates, each of which were well funded by venture capital. Uber, in particular, was not afraid to lose billions to expand into new markets and categories.