Uber interested in buying GrubHub; Eyes consolidation in US market

By Rahul Vaimal, Associate Editor
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Leading food delivery service, Uber has made an offer to acquire Grubhub. The deal could consolidate two of the largest food-delivery apps in the US. 

The companies are in discussions about an agreement and could reach an understanding as soon as this month.

“Consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.” Uber said it wouldn’t “respond to speculative M&A premiums” and that the company is “constantly looking at ways to provide more value to our customers, across all of the businesses we operate.”
– Grubhub Statement 

Grubhub, founded in 2004, is the oldest of the major food delivery companies in the US. In recent years, competition from DoorDash and Uber has reduced Grubhub’s profit margins.

Earlier, Uber had shut food-delivery operations in seven countries where the service had proved to be unpopular. Those markets served 1 percent of Uber Eats gross bookings and 4 percent of the business’s adjusted loss before interest, taxes and other expenses for the first quarter of 2020.

Uber’s food delivery service remains largely unprofitable. That dynamic has led to much thought on potential alliances in the industry. DoorDash, which is privately held and backed by SoftBank Group, is the most popular in the US, followed by Grubhub and Uber. Any merger between the major apps could draw antitrust scrutiny. Together, Uber and Grubhub could account for 55 percent of the market, according to Wedbush Securities.