Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Just Eat Takeaway weighs Grubhub sale as pandemic boost fades

Economy Apr 20, 2022 11:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Just Eat delivery man rides his bicycle in Nice amid the coronavirus disease (COVID-19) outbreak in France, February 16, 2021. REUTERS/Eric Gaillard

By Toby Sterling

AMSTERDAM (Reuters) -Europe's biggest meal delivery company Just Eat Takeaway.com is looking at selling U.S. arm Grubhub less than a year after buying it, under pressure from investors to revive its shares amid stiff competition and a fading pandemic boost.

In an abrupt turnaround, CEO Jitse Groen said Takeaway had hired banks to explore a possible sale of Grubhub - alongside potential partnership options it was already exploring - and that buyers had expressed more than casual interest.

"We are in talks with people around this (a sale), but I need to caution that doesn't automatically lead to a transaction," Groen told reporters.

Takeaway, which paid $7.3 billion for Grubhub in 2021 while racking up a billion-euro loss, has been hit as investors reappraise valuations for loss-making technology companies and stocks seen as big beneficiaries of the pandemic.

The company's shares, which have lost two-thirds of their value since an October 2020 peak above 100 euros, rose strongly in early trading but were up just 0.8% at 26.31 euros at 1426 GMT, not far above their 2016 IPO price of 23 euros.

At current levels, Takeaway's market value of 5.3 billion euros ($5.8 billion) is less than it paid for Grubhub.

CFRA Research analyst Angelo Zino said Grubhub's value was now likely much lower than during the pandemic, "as revenue remains above pre-pandemic levels but growth has stalled."

Competitors that might be interested in buying Grubhub, Doordash and Uber (NYSE:UBER) Eats, would likely face opposition from U.S. antitrust authorities, he said.

Investor sentiment towards online food companies has soured amid expectation that some customers who switched to home deliveries during the pandemic will return to restaurants.

In a trading update, Takeaway said orders had fallen 1% in the first quarter and it now expected "mid-single digit growth" in Gross Transaction Value (GTV) this year, instead of the "mid teens" predicted in January.

GTV measures the total value of food ordered and delivered.

Takeaway handled 264.1 million orders in the first quarter, compared with an estimate of 286 million by JPMorgan (NYSE:JPM) analysts.

CATALYSTS

The downgrade to Takeaway's outlook follows a warning by British rival Deliveroo last week that consumer spending could slow this year amid a cost-of-living squeeze.

Takeaway and Deliveroo have been striking deals with supermarkets to add on-demand grocery delivery to their offerings to try to stave off competition from "fast grocery" startups such as Gorillas of Germany and Getir of Turkey.

Groen said his operational focus would be on growing average order sizes and cutting costs. "We expect profitability to gradually improve throughout the year, and to return to positive adjusted EBITDA (core earnings) in 2023," he said.

Major shareholders including Cat Rock, the company's second-largest with a 6.88% stake, publicly criticised the purchase of Grubhub and called for its sale.

Grubhub has strong positions in East Coast cities, notably New York, but its profitability was hit by caps on the commissions it is able to charge restaurants in the pandemic.

Takeaway is challenging the legality of the fee caps, which it says are costing the company around 200 million euros annually in lost operating profit.

In a note, Barclays (LON:BARC) analysts said Takeaway looked undervalued on a "sum of the parts" basis.

"There are still potential catalysts to unlock this with the process on Grubhub ongoing, a sale of (Takeaway's stake in Brazilian business) iFood possible, legal cases around fee caps ongoing in the U.S., and the AGM upcoming."

Last week, hedge fund Lucerne Capital Management, with around 600,000 shares, said it would vote against the reappointment of the company's finance chief at the AGM in May to protest over alleged poor communication and the weak share performance.

($1=0.9262 euros)

Just Eat Takeaway weighs Grubhub sale as pandemic boost fades
 

Related Articles

Germany stocks lower at close of trade; DAX down 0.31%
Germany stocks lower at close of trade; DAX down 0.31% By Investing.com - Jul 04, 2022

Investing.com – Germany stocks were lower after the close on Monday, as losses in the Retail, Construction and Technology sectors led shares lower. At the close in Frankfurt, the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email