Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Just Eat Takeaway Shares Soar After Amazon Takes Stake in Grubhub Unit

Published 07/06/2022, 03:37 AM
Updated 07/06/2022, 03:41 AM
©  Reuters

By Scott Kanowsky 

Investing.com -- Shares in Just Eat Takeaway (AS:TKWY) soared by more than 17% on Wednesday after the online delivery service unveiled a new partnership with Amazon (NASDAQ:AMZN) that will see the tech giant take a stake in its Grubhub unit.

The deal, which is set to renew each year, allows Amazon Prime members in the U.S. to have a free one-year subscription to Just Eat's Grubhub+ offering. In exchange, Amazon will receive warrants for more than 2% of Grubhub's fully diluted common equity, along with a further 13% based on Grubhub's future performance.

Just Eat said the agreement will not have an impact on Chicago-based Grubhub's financial performance this year but will add to the unit's earnings and cash flow in 2023.

However, Just Eat added that it remains committed to working with its advisors to explore a "partial or full sale" of Grubhub. The group has reportedly received interest in the division from a number of suitors, including private equity firm Apollo Global Management.

"There can be no certainty that any agreement with any other parties regarding Grubhub will be reached or about the timing or terms of any such agreement(s)," Just Eat said in a statement.

Just Eat added that Grubhub's gross assets at end-2021 were €6.5B, while its annual pre-tax loss came in at €403M.

Wednesday's agreement with Amazon comes as Just Eat faces shareholder pressure to sell Grubhub, the delivery company it acquired last year for $5.8B in shares. Investor concerns are rising over the wider group's future profitability, with Just Eat warning of a slowdown in annual customer spending and intense competition from rivals like Deliveroo (OTC:DROOF) and Uber (NYSE:UBER). Just Eat said in April that it will be a year before it delivers any profits.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Meanwhile, aggressive central interest rate hikes aimed at reining in a recent spike in inflation, have undercut the assumptions of cheap capital costs supporting Just Eat's valuation. The company's shares have fallen by more than 80% over a one-year period.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.