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Just Eat Takeaway to acquire Grubhub for $7.3B

nytimes.com

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

#41

Post by anticsapp »

echelon wrote: post #39
qntmfred wrote: post #33

Earlier quoted context omitted.

The key word being rarely

Everywhere I've worked, 75% or more of acquisitions or acquihires went extremely well and resulted in strategic benefit and/or gain of great talent. There are only a couple of instances that stand out as being a bad fit, and one of those companies later got sold to another player in the same space for a profit. So it's really never been a bad use of capital from my perspective.

Are you sure it isn't 76% with all that hard cold data you're using?

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

#43

Post by cordite »

_jal wrote: post #28
cordite wrote: post #23

Earlier quoted context omitted.

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.

Ever go to an Italian restaurant and they have a 30 minute or so variance in how soon they bring your order? That’s because they don’t adjust for the online orders in their kitchen. Either constrained by physical size or staff, also most services don’t rate limit how many orders go to singular restaurants. It’s especially hard for a restaurant to suspend online ordering if they rely on email, fax, or robo called orders.

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

#44

Post by VWWHFSfQ »

alfalfasprout wrote: post #35

Is it just me or are all these delivery apps pretty much the same thing, just with different restaurants? In SF at least Grubhub tends to have some of the more "typical delivery" choices (pizza, chinese food, thai) and decent customer service, Doordash seems to have the most variety but the dashers take their merry time on their way to you (and customer service is nonexistent), Uber Eats is somewhere in between grubh…

I prefer Grubhub/Seamless in NYC. They're typically on bicycles or scooters and will bring the order up to your apartment door. Uber Eats people usually want you to come down outside so they don't have to double-park.

I'm not giving you a $10 delivery tip to drive my Five Guys order eight blocks.. You gotta get out and come up the stairs to my door.

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

#45

Post by viscanti »

anticsapp wrote: post #41
echelon wrote: post #39

Earlier quoted context omitted.

Everywhere I've worked, 75% or more of acquisitions or acquihires went extremely well and resulted in strategic benefit and/or gain of great talent. There are only a couple of instances that stand out as being a bad fit, and one of those companies later got sold to another player in the same space for a profit. So it's really never been a bad use of capital from my perspective.

Are you sure it isn't 76% with all that hard cold data you're using?

76% is "75% or more". So it's covered.

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

#46

Post by viscanti »

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?

They're getting stock in a post-acquisition combined entity. So a better way to think of it is they get 52% of the combination of both companies (which makes it weird to think they're the ones getting acquired - but that has to do with which entity ends up being the controlling entity).

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

#47

Post by allworknoplay »

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.

Irrelevant point? Could be accurate, but is all the more reason for them to merge if they think it improves the business. I didn't say "this will make them profitable", OP asked why they would do it and I answered. ¯\(°_o)/¯

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

#49

Post by adventured »

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?

It's not a $7.3 billion acquisition. It's roughly a $6b to $6.1b acquisition (and Just Eat's market cap is now around $7.75 billion USD). The value of the acquisition has changed.

Just Eat Takeaway is an NV / Dutch firm (also mentioned on their Wikipedia page [1]), here's their listing:

https://www.cnbc.com/quotes/?symbol=TKWY-NL

I believe they're legally based in the Netherlands after the combination between Just Eat and Takeaway, and trade on both the Euronext exchange in Amsterdam and London Stock Exchange.

Here is how it's structured (from the Wall Street Journal):

"Grubhub shareholders would receive 0.6710 Just Eat share for each Grubhub share, now worth just over $65 / share after a decline in Just Eat shares Wednesday"

Here's what Business Insider quoted previously:

"Under the terms of the stock-swap deal, Just Eat is offering roughly 0.67 of its shares for every Grubhub share for an implied value of $75.15 per share, or $7.3 billion based on Tuesday's closing price, according to the statement."

Notice that $75 / share figure, at $7.3 billion, is prior to the drop in Just Eat's stock. The new $65 / share figure quoted by the Wall Street Journal is based on the change in the stock price of Just Eat, which plunged from roughly €100 to €85.

If Just Eat's shares continue to decline in value, GrubHub shareholders still receive the same share ratio (valuing the deal at a lower figure accordingly).

[1] https://en.wikipedia.org/wiki/Just_Eat_Takeaway

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

#50

Post by dehrmann »

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…

> providing economies of scale

Developing a single platform counts as that. I guess it depends on how big fixed costs are compared to variable costs more than if you're the market leader. If they're a large component of them, then an acquisition could really help.

Looks like their 2019Q4 total revenue was $1.3B, cost of revenue was $790M, and opex was $530M. I assume the hope is to save a lot on opex.

> diversify or complement a company's activities.

A US business similar to the European one fits here.

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