Just Eat Takeaway to acquire Grubhub for $7.3B • Hacker News Board

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#21

Post by hayksaakian » Thu, Jun 11, 2020, 12:55 AM UTC

tybit wrote: post #20

It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B USD. How does an all stock acquisition of 7.3B USD work in this case? Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar?

1 example: they could take on debt from a Bank to make the purchase for example.

"Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon.

Mr. Groen, a Dutch entrepreneur, founded Takeaway.com in 2000 when he was a student frustrated with the challenge of ordering pizza online. He took Takeaway.com public in 2016, and now has a net worth of more than $1.5 billion, according to Forbes.

In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German portion of Delivery Hero’s business for about $1 billion in 2018."

They've been aggressively acquiring competitors for years, so this seems par for the course.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#22

Post by adrr » Thu, Jun 11, 2020, 12:57 AM UTC

So it's an all stock deal and it seems Grubhub purchase will be greater than the market cap of Just Eat Takeway. How does that work? What about control of the board?

Also seems strange that a $500mm revenue company is acquiring a $1.6bb company. All the financials for just eats are terrible. I am so confused on this acquisition and why shareholders approved.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#23

Post by cordite » Thu, Jun 11, 2020, 1:01 AM UTC

koolba wrote: post #8

allworknoplay wrote: post #6

Earlier quoted context omitted.

* 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.

Have you tried pizza pie?

But really, the economics are all in operations and scale.

Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#24

Post by granzymes » Thu, Jun 11, 2020, 1:02 AM UTC

bradleyjg wrote: post #9

crazygringo wrote: post #4

Genuine 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.

>Mergers and acquisitions rarely work out for the entities as such.

Could you provide a source for that?

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#25

Post by foobiekr » Thu, Jun 11, 2020, 1:03 AM UTC

bradleyjg wrote: post #9

crazygringo wrote: post #4

Genuine 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.

this is the correct answer imho

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#26

Post by grayfaced » Thu, Jun 11, 2020, 1:07 AM UTC

hayksaakian wrote: post #21

tybit wrote: post #20

It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B USD. How does an all stock acquisition of 7.3B USD work in this case? Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar?

1 example: they could take on debt from a Bank to make the purchase for example. "Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon. Mr. Groen, a Dutch entrepreneur, fou…

I don't get it. Why would a bank loan billions to a company losing money, so they can acquire another company losing money? The bank takes all the risk for little return. At what point should the bank just become an investor.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#27

Post by [deleted] » Thu, Jun 11, 2020, 1:08 AM UTC

granzymes wrote: post #24

bradleyjg wrote: post #9

Earlier quoted context omitted.

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.

>Mergers and acquisitions rarely work out for the entities as such. Could you provide a source for that?

[deleted]

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#28

Post by _jal » Thu, Jun 11, 2020, 1:09 AM UTC

cordite wrote: post #23

koolba wrote: post #8

Earlier quoted context omitted.

The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split.

Have you tried pizza pie? But really, the economics are all in operations and scale. Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.

The economics are that when you insert a multinational between a local restaurant and a local hungry person, revenue to the restaurant drops, prices paid by the customer rise, and service gets worse.

This is why after a couple orders right at the start of lockdown, I started calling restaurants directly. Some of them are delivering in breach of their contracts on the side, the rest I just walk over and pick up.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#29

Post by echelon » Thu, Jun 11, 2020, 1:09 AM UTC

bradleyjg wrote: post #9

crazygringo wrote: post #4

Genuine 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.

> Mergers and acquisitions rarely work out

Instagram

DoubleClick

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#30

Post by tim_sw » Thu, Jun 11, 2020, 1:13 AM UTC

allworknoplay wrote: post #7

tim_sw wrote: post #5

This 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 ;)

Yup, I meant that they will put in a higher bid, or they might buy this new combination. This area is strategically important for them, and if you’ve read previous merger/M&A stories or books about them, this seems just like the first salvo.