Uber said to be in talks to acquire Grubhub to create food delivery giant

[SAN FRANCISCO] Uber is in talks to acquire Grubhub, said three people with knowledge of the discussions, aiming to create one giant player in food delivery as more people turn toward those services in the coronavirus pandemic.

Uber recently approached Grubhub with a potential all-stock takeover bid, said two of the people, who spoke on the condition of anonymity because the details were confidential. In response, Grubhub asked for two Uber shares for each of its shares, two of the people said. That would value Grubhub's stock at more than US$60 a share, pegging a deal at around US$6.1 billion (S$8.6 billion), or roughly a 25 per cent premium to Grubhub's closing price on Monday.

The talks are still in process and could fall apart, the people said.

The discussions are a sign of how thoroughly the coronavirus has upended everything from the way that people are eating to how businesses must shift to find new growth. While food delivery has been offered for years, usage of the services has surged in the pandemic as consumers stay home and many restaurants across the country remain shut down.

At the same time, companies like Uber are trying to limit damage to their business from the coronavirus - its main ride-hailing business has cratered as people have stopped traveling - and instead double down on services that are growing.

The food delivery business has also been highly competitive, with rivals regularly undercutting one another on delivery prices, so a deal that would unite two of the players could help reduce those pressures.

After Bloomberg reported the talks between Grubhub and Uber, Grubhub's shares soared 29 per cent, while Uber's rose more than 2 per cent.

Uber approached Grubhub after the pandemic hit, said one person with knowledge of the deal talks. By then, Uber's main ride-hailing business had been severely hurt as most travel was halted.

Last week, the company posted a US$2.9 billion loss for the first three months of the year and said that even though its revenue was up from a year earlier, its ride-hailing business had all but collapsed in March. It also announced it was laying off 14 per cent of its workforce.

But its Uber Eats division, has been a bright spot. Revenue for the business rose 53 per cent in the first quarter from a year ago.

NYTIMES