Amazon agrees to take stake in Just Eat Takeaway’s Grubhub; latter’s European shares soars

Just Eat Takeaway.com, an Amsterdam-based online food delivery marketplace, announced on Wednesday that it has entered into a commercial agreement with Amazon in the United States. 

According to the commercial agreement, Amazon has agreed to take a 2 per cent stake in the Grubhub’s shares, which is struggling in the US. If the deal brings Grubhub enough customers then Amazon will also receive over up to a further 13 per cent of Grubhub’s fully-diluted common equity. 

Consequently, effective today, Amazon Prime members in the US can sign up for a free one-year Grubhub+ membership and access unlimited $0 delivery (on orders over $12 (€11.69)) from thousands of restaurants on Grubhub throughout the year. 

Additionally, the Grubhub+ members can access member-only perks and rewards. To reiterate, Just Eat Takeaway.com acquired Grubhub in a $7.3B deal last year.

Adam DeWitt, CEO of Grubhub says, “I am incredibly excited to announce this collaboration with Amazon that will help Grubhub continue to deliver on our long-standing mission to connect more diners with local restaurants. Amazon has redefined convenience with Prime and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers.” 

Post announcement, the Just Eat Euronext Amsterdam shares were up 17.21 per cent at €16.10 at 08:39 GMT.  

“The agreement is expected to expand membership to Grubhub+ while having a neutral impact on Grubhub’s 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards,” Just Eat Takeaway says in a statement.

Sale of Grubhub

Earlier this year, in April, the company announced that that it is looking to sell US-based Grubhub less than a year after buying it. Some of the decisions being announced as part of a trading update reflects the industry belief that consumer spending could slow for food delivery companies.

The decision to sell Grubhub comes after Cat Rock, the second largest shareholder of Just Eat Takeaway.com criticised the purchase of Grubhub and has insisted on selling the company.

According to Wednesday’s announcement, “The Company, together with its advisors, continues to actively explore the partial or full sale of Grubhub. 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).”

Exits Romania and recent troubles 

The Dutch food delivery company in Europe has been facing pressure from investors to turn around its business and consolidate loss-making operations.

A couple of months back, Just Eat Takeaway.com announced its plans to discontinue its platform and delivery operations in Romania as a part of cost-cutting. The company said it plans to focus its efforts on sustainable profits and market-leading positions. 

Complaints from investors and a steady decline in revenue have caused the Dutch company to shift its focus towards improving profitability and gross transaction value. 

To do so, they will be aiming to increase GTV by nearly €30B over the next five years and are prioritizing achieving high levels of success when it comes to any increase in gross transaction value. 

In an attempt to improve bottom-line results, the meal delivery platform plans to improve its courier costs per order and reduce overheads and operating expenses.

In May, Just Eat Takeaway.com’s boardroom went into crisis mode as the chairman Adriaan Nuhn resigned from the supervisory board at the closing of the AGM of the company. In the other news, Chief Operating Officer (COO) Jörg Gerbig was suspended hours before the company’s annual shareholder meeting due to personal misconduct at a company event. 

Just Eat Takeaway.com: What you need to know

Founded by Jitse Groen and Piotr Czajkowski, Just Eat Takeaway claims to be one of the largest online food delivery marketplaces outside China. It is focused on connecting consumers and restaurants through its platforms. 

The Dutch company also provides its proprietary ‘restaurant delivery’ services to restaurants that do not deliver themselves. It is connected with nearly 634,000 restaurants and operates in the UK, Germany, the Netherlands, Canada, Australia, and Austria, among other countries.