Grubhub, a struggling US food delivery company run by Just Eat Takeaway.com, will now be owned by Amazon, who will also grant one year’s access to its Prime customers.
The agreement is a huge relief for Just Eat Takeaway, whose shares have dropped by 70% this year as a result of shareholders’ demands that it sell or partner with Grubhub, which it just recently acquired for $5.8 billion in stock.
Credit Suisse stated in a note regarding the agreement that the collaboration should benefit Grubhub.
The bank stated that “no value has crystallized, yet (the) door is open for more.”
Just Eat’s stock price was up 14% to 15.70 euros at 07:10 GMT in Amsterdam trading.
According to the agreement made public on Wednesday as part of Amazon’s July “Prime Day” promotion, consumers of Amazon would get free delivery on orders over $12 in the 4,000 areas that Grubhub serves.
The agreement will increase traffic for Grubhub, which has been losing market share to Doordash and Uber Eats as the COVID-19 pandemic’s effects subside.
In return, Grubhub will give Amazon warrants worth 2% of its shares as well as an extra 13% of its shares, subject to the agreement bringing in enough consumers for Grubhub.
According to a statement from Just Eat Takeaway, “the arrangement is expected to boost membership to Grubhub+, while having a neutral impact on Grubhub’s 2022 earnings and cash flow, and being earnings and cash flow accretive for Grubhub from 2023 onwards.”
At the end of 2021, according to the business, Grubhub’s gross assets were valued at 6.5 billion euros ($6.67 billion), and same year, it suffered a pretax loss of 403 million euros.
