Industry giant Just Eat Takeaway and Amazon are joining forces in the highly competitive food delivery business in the United States. US customers of Amazon’s Prime payment plan can use the subscription version of the GrubHub delivery service free of charge for one year, with no delivery fees. Amazon also secured a stake of up to 15 percent in GrubHub via options, as the companies announced on Wednesday. The level of participation should depend, among other things, on how many new customers the partnership brings.
Just Eat Takeaway stock jumped 16 percent after the announcement. Compared to the exchange rate at the turn of the year, this still corresponds to a loss in value of almost 70 percent. The industry giant is struggling with slowing growth after a boost early in the pandemic. Last year’s purchase of GrubHub, which was paid for with $7.3 billion in stock, has been criticized by some as overpriced. Just Eat Takeaway has now confirmed that a sale of GrubHub is being considered. The service is struggling in the US market with competitors such as DoorDash and Uber Eats.
The deal with Amazon will not affect GrubHub’s earnings this year, the company said. However, it is expected that the number of customers of the GrubHub+ subscription service will increase and that this will be reflected in the profit figures from 2023.
Amazon itself experimented with food delivery in the United States a few years ago, but did not continue the experiments. The UK already has a partnership model similar to what we have now with GrubHub – but there Prime customers have access to free delivery from Deliveroo, a competitor to Just Eat Takeaway. Amazon also has a 16 percent stake in Deliveroo.
Deal between Just Eat Takeaway and Amazon supports industry
The hard-hit shares of HelloFresh and Delivery Hero also benefited from a deal between Just Eat Takeaway and Amazon on Wednesday. In the wake of Just Eat Takeaway, which at times soared by 19.18 percent to EUR 16.37 on the Euronext, HelloFresh gained 6.71 percent via XETRA and Delivery Hero 2.19 percent.
The market has repeatedly speculated that Just Eat Takeaway could separate from GrubHub. According to a media report, however, the boss of GrubHub countered these speculations to a certain extent. It’s more about finding a way to support growth than a sale, Adam DeWitt said. With the agreement between Just Eat Takeaway and Amazon, speculation could now be revived.
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Image sources: HelloFresh SE, Delivery Hero