Just Eat Takeaway to acquire Grubhub for $7.3B
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Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#2I read an article with some details from the Uber side on why that deal fell through. I never thought I'd read an article where Uber seemed to be on the ethical right side of things...
"Uber also believed it would would need to stop several undesirable business practices from Grubhub, including phone charges and cybersquatting, or buying domain names with the intent to profit from them. Grubhub has denied cybersquatting in the past. "
https://www.cnbc.com/2020/06/10/uber-exasperated-with-grubhu...
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#3I bet GrubHub realizes it can get an even bigger payday later on when either Uber or DoodDash will need to acquire it. That's probably why they didn't want to consolidate with Uber immediately.
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#4Genuine question: why?
I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities.
But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here.
Few further economies of scale when you're already at continent-size for an ultimately "local" business, no monopoly or network benefits, and zero diversification.
If this were manufacturing or retail then benefits are pretty obvious.
But in this case, what am I missing? How on earth does this justify a 27 percent premium on GrubHub? It is purely a strategic defensive move to prevent Uber from buying it, and nothing more?
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#5This story is not yet over. There’s a decent chance that Doordash or Uber will make a bid.
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#6Genuine question: why? I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities. But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here. Few further economies of scale when you're already at continent-size…
* They may expect to achieve efficiencies with the business that will throw off more profit.
* They may be protecting their own territory from grubhub's eventual entry.
* They may simply have extra cash (or stock purchasing power) and want to use it to secure greater future cash flows rather than just sit on it.
* They may feel more able to enter other markets via grubhub than their own brand/company.
etc.
Edit: Also, acquisition premia reflect benefits that derive from taking a business business private, including control over the timing of dividends, no worries about control/governance, a larger-than-expected reduction in hard costs of compliance, and other factors, in addition to some of the benefits I mentioned above.
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#7This story is not yet over. There’s a decent chance that Doordash or Uber will make a bid.
Uber did make a bid, and these two signed an agreement. This is in the first paragraph of the article ;)
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#8Genuine question: why? I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities. But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here. Few further economies of scale when you're already at continent-size…
* They may expect to achieve efficiencies with the business that will throw off more profit. * They may be protecting their own territory from grubhub's eventual entry. * They may simply have extra cash (or stock purchasing power) and want to use it to secure greater future cash flows rather than just sit on it. * They may feel more able to enter other markets via grubhub than their own brand/company. etc. Edit: Also…
The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split.
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#9Genuine question: why? I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities. But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here. Few further economies of scale when you're already at continent-size…
Mergers and acquisitions rarely work out for the entities as such. To understand why they nonetheless continue to happen so often it’s necessary to peer beyond the corporate veil and look at the incentives of the individual players.
Re: Just Eat Takeaway to acquire Grubhub for $7.3B
#10Genuine question: why? I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities. But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here. Few further economies of scale when you're already at continent-size…
First step to becoming a global company maybe?