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Uber seeks acquisition of Grubhub; meal-delivery business gets a boost

Uber seeks acquisition of Grubhub; meal-delivery business gets a boost
Uber seeks acquisition of Grubhub; meal-delivery business gets a boost

In a deal which would unite two behemoths in meal-delivery business, Uber Technologies Inc. is vying to acquire Grubhub amidst the COVID-19 pandemic that has triggered demand for their services.

According to the sources acquainted with the update, the negotiation may be witnessed in an all-stock deal. The ride-hailing giant approached Grubhub with a potential deal as they strive to come to terms with stock exchange ratio. It is too early to conclude if they will reach an agreement, cite sources.

Uber Eats, Uber’s meal delivery service, is being perceived as a bright spot for the company at the time when demand for its ride-hailing business has taken a major jolt.

Angelo Zino, Research analyst at CFRA, stated that the deal would have an influence on the U.S. delivery market, turning it into a “two-horse race.”

After the news of the negotiation surfaced, Uber’s shares were up 2.4%, while Grubhub closed up 13.6%.

Spokesperson of Uber allegedly declined to respond to speculative mergers and acquisitions; however, he is said to have stressed the need of consolidation in the industry.

At the time when demand from home-bound consumers is soaring, consolidation is a matter of time, claim experts.

While Uber Eats had 20% share and Grubhub witnessed 28% share, DoorDash had a 42% share of meal delivery sales in March 2020.

According to reports, Uber was valued at around $55 billion, Grubhub registered a market capitalization of around $4.3 bn as of Monday’s closing.

First-quarter revenue of Uber Eats rose over 50%, translating to $819 million; following the closing of business operations by several restaurants. The economic fallout of COVID-19 is being observed in several industries.

For the record, Uber sold its Indian food business to rival Zomato and the company has shuttered Eats operations in eight countries.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.