Grubhub stock price explodes 10% in premarket on confirmation of Just Eat Takeaway deal

Shares of Grubhub (NYSE: GRUB) are trading nearly 10% higher in premarket after the food delivery company accepted a $7.3 billion all-stock offer from European food-ordering firm Just Eat Takeaway.com NV (AMS: TKWY).

Fundamental analysis: Just Eat takes advantage of Uber’s inability to close the deal

Just Eat Takeaway.com NV, the Dutch food-ordering company, said it agreed to a deal to buy the U.S. food delivery company Grubhub in the all-stock $7.3 billion deal.

“Matt [Maloney, CEO of Grubhub] and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents. Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector,” said Jitse Groen, CEO and founder of Just Eat Takeaway.com, in a joint press release.

If completed, the deal will result in the creation of the biggest food-delivery company in the world, outside of China. Grubhub’s food delivery services will be now available in 25 countries around the world, including four of the world’s largest profit pools in online food delivery: the U.S., the UK, the Netherlands and Germany.

“Combining the companies that started it all will mean that two trailblazing start-ups have become a clear global leader. We share a focus on a hybrid model that places extra value on volume at independent restaurants, driving profitable growth,” Maloney said. 

“Supported by Just Eat Takeaway.com, we intend to accelerate our mission to be the fastest, best and most rewarding way to order food from your favourite local restaurants in North America and around the world. We could not be more excited”.

In May, Invezz reported that Uber launched an attempt to buy Grubhub, however the talks fell apart this week. According to Maloney, Uber’s offer prompted Just Eat Takeaway to come forward with its own offer. 

This deal comes just a few months after Takeaway acquired Just Eat in January for $7.8 billion. In 2019, Just Eat Takeaway.com had sales of 1.5 billion EUR, compared to Grubhub’s 1.2 billion EUR. 

Technical analysis: Grubhub stock price rallies

Shares of Grubhub have gained around 10% in premarket trading so far on the confirmation of the deal with Just Eat Takeaway. Conversely, shares of the Dutch company fell 13% yesterday, before recovering around 2% today. 

As a result, Grubhub stock price trades at the highest levels since September 2019 as the buyers are now testing a descending trend line that connects multi-year highs. A break above this level would pave the way for a test of $67.50, while resistance around $78 represents a key mid-term target for the bulls. 

Summary

The Dutch food-ordering giant Just Eat Takeaway confirmed the deal to buy the US-based Grubhub for $7.3 billion in stocks. If the deal is confirmed, Just Eat Takeaway will become the world’s largest food-delivery company outside of China.