I read an article with some details from the Uber side on why that deal fell through. I never thought I'd read an article where Uber seemed to be on the ethical right side of things...
"Uber also believed it would would need to stop several undesirable business practices from Grubhub, including phone charges and cybersquatting, or buying domain names with the intent to profit from them. Grubhub has denied cybersquatting in the past. "
I only know them from their Dutch branch Thuisbezorgd, which seems fairly decent, and has contracts with connected restaurants. Quite recently they've been under attack for abusing their near-monopoly (they do have Deliveroo and Uber Eats as competitors, as well many independent restaurants; many connected restaurants also have their own site) by raising their margins, putting pressure on restaurants.
GrubHub sounds like the worst of the worst, so I was quite surprised to learn they were bought by Thuisbezorgd's parent.
Its a place that's on thuisbezorgd but has no own website. Just this shady ridiculously long URL that is an exact copy of the thuisbezorgd page, with a thuisbezorgd banner on it.
Its a place that's on thuisbezorgd but has no own website. Just this shady ridiculously long URL that is an exact copy of the thuisbezorgd page, with a thuisbezorgd banner on it.
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 for an ultimately "local" business, no monopoly or network benefits, and zero diversification.
If this were manufacturing or retail then benefits are pretty obvious.
But in this case, what am I missing? How on earth does this justify a 27 percent premium on GrubHub? It is purely a strategic defensive move to prevent Uber from buying it, and nothing more?
* 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, acquisition premia reflect benefits that derive from taking a business business private, including control over the timing of dividends, no worries about control/governance, a larger-than-expected reduction in hard costs of compliance, and other factors, in addition to some of the benefits I mentioned above.
But, Just Eat and co did solve it with volume; they made it possible for countless food places to add delivery to their repertoire, and their app added discoverability.
I would never have learned about local food places if it wasn't for that app.
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.
If nobody subsidized delivery workers' wages with tips, delivery companies would have to start paying workers enough to make it actually worth their time to begin with, and pass those costs onto VCs and eventually consumers.
More reliable income for the delivery workers, more transparent delivery pricing for consumers. What's not to like?
A similar dynamic will likely play out in other industries where tipping is common as well.
Alas, I do end up tipping in real life because I don't want delivery workers to suffer more than they have to in the mean time until not-tipping becomes the norm and wages increase as a result, so it's a bit of a chicken and egg problem.
Just stop counting tips for minimum wage and pay everybody a liveable wage. You can't start this change from the tipping side, because that way it primarily it hurts the workers.
Tips have completely died over here due to online payment. You order, you pay, food gets delivered. There's no stage for tipping.
Back when you had to pay cash on delivery, tipping was pretty common (at least for me), but right now there's just no reasonable moment to tip anymore.
Of course its trivial to include delivery cost in the price. You know where it needs to go, so you can make a good estimate of the time it takes to deliver there, and include that in the price.
Tipping isn't bad, because of it's infrequency. It's bad because it's unclear and hidden.
Consumer service business cannot pay their service employees more, than what consumers are willing to pay for the services. In most cases the business is just a venue for consumers to acquire services from individuals. In restaurants the individuals are waiter.
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.
> 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.
Exactly, when the Softbank or VC money runs out for Doordash and the like it will be total mutiny, I doubt most if any drivers, outside of the Top dasher that accepts any orders, will continue to do so when the pay rates are reflecting the true costs of all externatalities are included in the total calculus. Several drivers see their 0% acceptance rate as a badge of honor, as its their only real avenue for opposition against the low delivery pay orders.
I was interested in the logistic sides of food delivery systems, especially during the shutdown, so I started to spend an hour a day of research on DD on their subreddits, and over time that led to even doing a few dashes myself during this period... and suffice it to say, everything from their app, to customer/dasher support, to the pay model are not sustainable so long as Humans are involved in the equation.
I've spoken to local restaurant owners and cooks during the shutdown in person, having experience in the Industry, and most were reluctantly using it as crutch in difficult times but it was cutting into their over all margins, which already suck.
Now with things starting to re-open in many states I hope they start to de-couple it to be less than the 10% of their total sales for their sake.
I wonder what would happen if I signed up for Doordash as a driver, picked up as many orders as I could in one evening, and just donated the food to the poor and needy? How long until I'm booted and banned as a driver?
Disclaimer: I'm not advocating this and I'm in no way condoning such behaviour with the following.
From what I saw when they did updates, usually on Friday evenings during the dinner rush no less, the system would crash and result in any and all current orders being essentially undeliverable as the app crashed and often you couldn't log in or out of the system nation-wide for 30 mins to hours later.
Furthermore, as I was monitoring this alongside the mass unemployment numbers rising due to the pandemic I saw the influx of new users that followed: so, I noticed that many hapless, and panicked users would be unable to fulfill an order because of random situations. I started to feel really bad for them, too as most were just trying to be as honest possible.
So, while I don't suggest doing that, see disclaimer above; I think if you signed up you would eventually have an order eventually 'slip through the cracks' through not fault of your own. Customer support was based overseas, and were limited and then inundated with requests so realistically nothing was done to prevent anyone giving the order away.
What you have to also keep in mind is that these partnerships are often with franchisees' or privately owned restaurants who ultimately take the hit when food is not delivered and a refund is issued. Which is why you see vigilante like behaviour be lauded by Doordashers when they see pizza being arbitraged, and them saying 'F-Doordash.'
So, in short, if you did it long enough you wouldn't need to steal anything and your opportunity would happen anyway through not fault of your own.
I highly suggest people read the r/doordash sub-reddit, its anecdotal but also direct feedback from a wide breadth of drivers, some positive, some neutral and a lot negative ones about the absurd algorithm based compensation model: the recurring $3 for +15 mile delivery kind of deal.
So, as person who spent a lot of time in the Culinary Industry, just do the right thing and buy any food you want to donate. Playing Robinhood within this context just nets a situation in which almost nobody ever wins.
There was a user here on HN who was trying to launch his own food delivery app; I wish he'd update and see if he had any updates on his progress and if he took significant Market Share from these big players.
I'm highly sceptical about his prospects, mostly because of the upfront cost of being moral.(you'd have to pay $15/hr to a driver in NYC)
Unless he decided to go immoral and shaft the delivery people.(Having seen how much abuse undocumented waiters and delivery people suffer from the restaurants)
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.
>> The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split.
> Have you tried pizza pie?
IIRC, proper pizza delivery requires a special warming bag. These generic delivery companies that employ gig-working randos don't equip their drivers with those bags, so they suck at delivering pizza at any distance, greater "efficiency" or no.
These are or were available. I’ve seen several branded bags both as a diner watching the order come in and as a customer ordering food. Whether they are given away, given upon request, or available for purchase, I have no idea. And I haven’t seen one in awhile, but I’ve also greatly reduced ordering this way and exclusively use Uber when I do.
I see doordash/grubhub/ubereats folks with big insulated bags(or backpacks in the case of bike/moto folks) pretty regularly. Not sure if they are required(or provided or sold) but they are definitely available.
> I see doordash/grubhub/ubereats folks with big insulated bags(or backpacks in the case of bike/moto folks) pretty regularly. Not sure if they are required(or provided or sold) but they are definitely available.
They're available, but I don't think they're universally used. I read one article where the a pizzeria was offering bags for the drivers to borrow (because of bad reviews for cold delivery pizza), but a lot of them refused because they'd have to leave a deposit and didn't want to return to the store to return the bag.
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)/¯
Mergers and acquisitions rarely work out for the entities as such. To understand why they nonetheless continue to happen so often it’s necessary to peer beyond the corporate veil and look at the incentives of the individual players.
One KPMG study found that 83 percent of these deals hadn't boosted shareholder returns, while a separate study by A.T. Kearney concluded that total returns on M&A were negative.
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.
My current office was an acquisition. Two cohorts of my colleagues are from acquisitions. One of our newer major revenue streams. Acquisition.
Unrelated thing not core to the business that we sold. Acquisition we spun off at a profit.
It's not 75% exactly, but this isn't even napkin math. Just top of mind. I feel as though you're belittling my experience and my person. Why? And also, please don't.
I've told you that from my direct experience, most acquisitions I've been witness to have been well thought out, calculated moves. It turns out we're doing a good job.
A lot of big company initiatives are acquisitions in non-obvious ways. For example even Google Maps started off as an acquisition of Keyhole Corp - a small startup focused on mapping technology.
One of the things that article overlooks though is that almost all multinational companies wouldn’t be what they are today without acquisition and inorganic growth.
Even that article says it: if Google avoided acquisitions they wouldn’t have Android and YouTube. Disney wouldn’t have Pixar and Fox. The biggest companies in the world would be different - and for the surviving multinationals often their acquisitions defined their current business.
Some of this is successful, some of this is a failure, but it’s a game that a lot of companies needed to play to achieve their current market position.
In fact, in some markets not touching M&A means not growing your core business (eg some retailers), and some big businesses may not exist anymore if they didn’t do the acquisitions they did.
As a massive Disney fan, the parks would be very different! Almost all new rides in the parks are based on Pixar / Marvel / Fox properties.
Firstly Pixar - The Pixar brand pretty much turned around the failing 'California Adventure' after the 'Pixar Pier' conversion. Toy Story alone has more rides than any other movie with Midway Mania, Slinky Dog Dash, RC Racer, Toy Soldiers Parachutes and Slinky Dog Zig-Zag Spin. The French pavilion in Epcot is getting Remy’s Ratatouille Adventure (which is already in Paris). There would be no crush coaster, no Radiator Springs Racers...
Disney probably wouldn't have entire areas of their park dedicated to Pandora and Star Wars, both of which were after the aquisitions of Fox (Avatar) and Lucasfilm (Star wars). Both Florida and California have Guardians of the Galaxy rides enabled by the acquisition of Marvel, and are planning more Marvel based attractions.
Bob Iger realised that just licencing these properties wasn't good enough - only ownership of the brand can protect Disney's long term interests ('What if pixar decides just to stop making Toy Story? Or refuses to licence their next hot property? Or gets acquired by our competitor?').
Name one decent Disney animated movie that was released after Pixar was founded (excluding Pixar films post-acquisition).
There aren’t many because most of Disney’s talent left around when Pixar was founded. Without movies to continuously hook new kids, their entire empire is a house of cards.
Pixar was founded in 1986. They started releasing theatrical films with Toy Story in 1995. Are you really saying there hasn't been a single good Disney animated movie in the past 25 years? What's the basis for that statement?
The history of the two studios is way more involved than what you're suggesting, and talent moves around between studios quite a lot. And 25 years is a long time; there have been entire generations of talent that have risen up since then, and trust me, they're not all at Pixar.
Source: I worked at Disney Animation for nearly a decade (and closely with Pixar during that time). I'm certainly not unbiased but probably way more informed.
The argument is that HBR's article is just speculation, nothing more.
Some mergers have literally saved companies, some have ruined them, some are considered 'unsuccessful' for esoteric reasons and others successful for purely numeric ones.
Just Eat Takeaway seems to be a recent creation through the takeover of just eat by takeaway. With another acquisition so soon, I think you'd find some answers if you look at how management there is compensated. If you have a willing/uninvolved board (or a board that still loves the idea of rollup companies that grow through M&A), and aquisitions help you hit a few targets (total revenues, total market cap) that get you a bonus, well, you can see where that goes.
Tax optimization - easier to funnel out money if all your subsidiaries are lending IP belonging to the same company in the Cayman Islands. Bigger the market, more "lending" from the tax-free IP holder, and less taxes payed on both sides of the Pond.
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.
I’m not convinced that unifying the tech stacks here really buys much in the way of value for a food delivery business.
The real value is the business relationship with the delivery network. A deal that expands the delivery network and adds value to customers through reduced delivery times and improved overall service is the thing that scales.
Competition... monoply. Ubers Eats and Deliveroo have massive control. I think what many of the players are concerned about is Amazon entering the market via Deliveroo investment of $500m.
Yes, I did mention that in my own comment. I can only imagine Amazon are desperate to re-enter... I mean they seem set-up for this to happen eg infrastructure. Hence, why they are investing in Deliveroo, who are also setup pretty well. In fact I reckon the investment in Deliveroo and potential acquisition of Grubhub by Uber is what shook Takeaway.com (Just Eat) into this panic buy haha
This is an all stock deal, so valuations are about as realistic as a televised poker tournament. No one is paying a 27% premium in cash; they're spending their own ridiculously valued stock.
There is no business model in the world that makes grubhub a 7B company. If proven wrong I will gladly eat a hat delivered by them.
Just Eat had a very nice profit of 101m GBP, so the business model works. However Grubhub is not that impressive, with a 12% YoY Growth, Compared to Just-Eats 43%.
From Grubhub "Revenues: $363.0 million, a 12% year-over-year increase from $323.8 million in the first quarter of 2019."
One broad thing I can think of is that there aren't strict GDPR requirements in the United States. Might be the case the value of user data alone might make the sale worth it, but I am speculating here.
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 grubhub and doordash in selection and has nonexistent customer service (but at least give you a refund if something goes wrong), caviar has a smaller selection but a lot of unique/higher end things (along with a terrible app but OK customer service), and Tock is targeting the "high end at home" market. There's also postmates which seems more expensive than the others for the same exact restaurants (but seems to have more traction in LA).
At the end of the day, the search is really bad (clicking the healthy category includes deep dish pizza and fried chicken on almost all the apps), the drivers aren't adequately compensated so the customer experience is bad (your driver might make 4 stops on the way to you and your food will be cold), and the apps are slow and buggy.
I'm convinced that significant improvements in search, recommendations, adding proper review support, and finding a way to not piss of restaurants in the process will determine the winner in this battle. The differences in selection are too small (in SF caviar which is owned by doordash and tock being the exceptions) to really crown a winner on that front.
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.
This is what I don't get. As soon as I started reading about all the unfair business practices by delivery companies, I just started picking up my food. Gets me out of the house, removes the middle man, supports local business while cutting out the larger business that funnels wealth to the top echelons. What's not to love?
If it's hot outside or whatever, it's still a small price to pay for doing the right thing.
Pretty much. Though one factor is in the US there's really dumb zoning concepts that basically led to longer drives to get to business areas. This is why bicycles never really caught on as a major mode of transport in the US, a 5 minute bike ride is one thing to get lunch, a 20 minute ride without any dedicated paths and often restaurants being placed in a shopping hub like area designed around highway access is a different story. It's all a sort of hassle so many people may prefer just ordering in, but yeah otherwise we are pretty lazy lol. Also, on 'doing the right thing'.
wait... this comment is confusing. how is he not contributing towards "keeping the restaurant in business" by ordering delivery vs picking it up in person?
When you order through a delivery service, the restaurant is generally paid less than their normal menu price, and none of the tips go to the kitchen staff.
In addition to charging the restaurant, the delivery service charges the customer a higher price than the restaurant would. They add delivery fees and service fees. On top of that, the online menus in the delivery service apps often have higher prices than the restaurant’s “real” menu.
Restaurants often negotiate special deals with the delivery services, so all these details can vary. However, delivery app margins are much lower than carry out or dine in margins.
Yes, but a restaurant wouldn't be entering into these special deals if it wasn't beneficial to them as well. Even if the margins are much lower, it could be offset by the increase in number of customers/orders.
I've talked to people who run restaurants and in their words uber eats is not worth it economically. They just do it, barely breaking even, as a marketing thing, hoping people will like the food and go to the real place.
Restaurants handle this issue in many different ways. I have been to several who explicitly state that all tips are divided & shared among all employees, and I think this is a good model. I've also seen one with a separate tip jar for kitchen staff, which may be a better option in some places. Really, why should the server make more than the cook or the dishwasher? Are they actually working harder? [I know, their wages are often structured differently, but I question whether they should be.]
At least it still avoids all the other problems, not to mention the domain squatting, misrepresentation of search results, and of course the upcharge on your end and the downcharge on the restaurant's end.
Often these delivery services take around 20% off the top of the restaurant's pay in addition to the 'fees and taxes' they take out and 'delivery fee' and 'driver tip', plus specials and discounts generally come out of the restaurant's cut too, plus door-dash and the like also take out cuts on advertising.
But let me take this a step further because you're not just screwing the restaurant...
The delivery driver is ALSO being screwed by the nature of all of this!
You see, on average the pay and tip of a delivery actually is less than the cost of car wear and tear + minimum wage + gas! People take this job to have cash now but will often end up stuck with the bill in the end. By supporting these delivery companies you are actually supporting companies that are taking aggressive advantage of people to drive engagement numbers and eventually...
^ $7.3 Billion in investor payoffs for a company that has effectively only built an app and menu directory and did basically none of the work. They classify drivers as 1099s to avoid having to adhere to minimum wage laws, they dodge laws where they can and take zero responsibility when people screw up. All of them are exploiting poor people and while one can argue that that's the driver's fault.. as long as you pay the Doordash or GrubHub's of the world their fees and as long as they take 20% off the restaurant's cut, the restaurant wont be able to afford to pay to hire more employees which helps these delivery app companies get drivers due to unemployment. Should I also note that this same company used to pocket the driver tip?
> Doordash seems to have the most variety but the dashers take their merry time on their way to you (and customer service is nonexistent)
I was picking up sandwiches from a popular sandwich joint last week and the Doordash drivers were picking up multiple orders each time. So most likely the "delay" is really them stopping at other houses to drop off food on their way to you, or vice versa.
Both GH and DD do this now, honestly it feels like a massive bait and switch because you don't know which order # you'll be and the system never clarifies that there can be others ahead of you. Notably, the other orders can be from other restaurants so your driver may have to stop and wait while your food is just in their car. If you don't live in a metro area the total out of the way time can be more than 25 minutes. This means that ordering a small hot meal over GH can show up 20 minutes after preparation or 45 minutes after. There's a very large difference between these two orders but they make you set the tip ahead of time and charge the same fee. I once ordered ice cream, they made a second stop. It was just goop. Just completely absurd.
(This is a strange world where I can say... obviously Uber is more ethical here. The Uber X service is clearly labeled as such and has realistic arrival times and an option to pay for ensured rapid arrival)
> Is it just me or are all these delivery apps pretty much the same thing, just with different restaurants?
They're surprisingly different in both how good the software is and how efficiently they operate. I'll give three examples of my experiences with European apps.
Wolt (Finnish) - Super polished native app. Very accurate to-the-minute ETA predictions, you can see GPS tracking of couriers as soon as they start heading towards the restaurant. The menus are polished and full of pictures. You can rate couriers and food. The app even includes a mini-game on the ETA screen. Payment by card associated with your account.
Bolt (Estonian) - A comparatively new entry in food delivery with an ok native app. ETAs are all over the place as it keeps re-calculating, although eventually the delivery is reasonably paced. GPS tracking starts after the courier has picked up the food. About a third of the food items have pictures. No rating of food or couriers. No mini-games. Occasional crashes. Payment by card associated with your account.
Lieferando (German - owned by Just Eat Takeway, the company buying Grubhub) - Complete dumpster fire. The "native app" is just a webview of some 2010 style webpage. No pictures of food, no GPS tracking. A static "ETA 30min" estimation that never changes or counts down, it's just always 30min. Payment is a per-order giant form of options that's super German, prioritizing cash-on-delivery. I made the mistake of paying by card. The food never arrived at all. The app itself doesn't give any notifications that there's a failed delivery or anything - the ETA was 30min even 48h later. Customer support is extremely hostile and only responds after several days. The iOS reviews are full of people complaining that they got scammed with no delivery. Ended up having to do a chargeback through my bank.
> Why is cold food a problem? It is easy to heat it up in a microwave right?
I think its dependent on the type of food. As some foods simply don't hold well, and shouldn't be offered as a to-go 'fried calamari,' 'pasta carbonara' 'tempura' or sushi etc... and cannot be re-heated. But, even other things like fries taste pretty poorly when cold and could spoil an entire meal.
Whereas, drunken noodles, pizza or a chiptole burrito can easily be re-heated and taste just as good.
I've ordered Doordash 5 times over that observation period, and all but one time the food was pretty warm, but that's because I tipped $5-10 and the restaurants I ordered from were near by and less than a 4 miles radius from my home. Since it was simply re-heatedable stuff I didn't mind, also, I wasn't really interested in the food so much as data aggregation.
Wow. I thought Uber were going for it? The food delivery market share war is really interesting.
For folks in the UK. The Competition Markets and Authority (CMA) delayed a decision on whether Amazon could invest $500m in Deliveroo as of yesterday[1]. Deliveroo are more established in Europe but I can now see the CMA approving Amazon investment into Deliveroo[2]. Why? Just Eat provided evidence to the CMA recently on why the Amazon investment into Deliveroo could be problematic [3]. Just Eat then go off to spend a $7b to secure the U.S market ahaha. In my opinion Takeaway.com/Just Eat are now scrambling for marketshare.
Amazon tried to enter the food delivery market back in 2014-16 and they had every right to![4]. But, competition pushed them out in my opinion. So now Amazon are wanting to re-enter via investment into Deliveroo. It's very smart move because Deliveroo service is pretty amazing already.
Just Eat are getting too big. They destroyed Hungry House by buying it a few years ago. This was before Deliveroo and Uber Eats were known to most people. Seems like Just Eat are afraid of competition.
I was not aware of Hungry House. but you're right! They purchased them too [1]. Yeah it feels like a "screw it" lets do this type of move from Takeaway.com/Just Eat. From my research it looks like Just Eat are threatened by competition and re-entry into the market from Amazon. $500m investment could really push Deliveroo on. I see similaries between Deliveroo and Amazon in wanting to provide very quick delivery service.
Well, the big difference between GrubHub/Just Eat and Deliveroo/Uber is that the former were actually profitable software businesses, while the latter are VC funded blitzscaling nonsense.
But now the profitable companies are forced to run unprofitable delivery networks because of the VC funded (well public market funded for Uber now) hype-train of on-demand.
Is there a Gresham's law for business models or something?
I disagree. Deliveroo have a presence in Europe (eg Italy, France, Belgium). Then theres Hong Kong, Austrilia, UAE, Singapore. Investment would affect other markets too.
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?
1 example: they could take on debt from a Bank to make the purchase for example.
"Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon.
Mr. Groen, a Dutch entrepreneur, founded Takeaway.com in 2000 when he was a student frustrated with the challenge of ordering pizza online. He took Takeaway.com public in 2016, and now has a net worth of more than $1.5 billion, according to Forbes.
In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German portion of Delivery Hero’s business for about $1 billion in 2018."
They've been aggressively acquiring competitors for years, so this seems par for the course.
I don't get it. Why would a bank loan billions to a company losing money, so they can acquire another company losing money? The bank takes all the risk for little return. At what point should the bank just become an investor.
Well probably the only "bank" involved was an investment bank. Typically they would issue bonds rather than taking out a mortgage. Some investors like the risk available with such corporate bonds.
Although this may not be a LBO situation, selling junk bonds is often the way that PE firms steal everything from firms they "buy". I have no idea how the "all-stock" claims jive with selling bonds. I suppose the buyer could just issue more of its own stock, if the numbers don't add up. [EDIT:] This last maneuver seems more plausible if the buyer itself was previously a LBO target and the PE dudes haven't totally drained it yet.
Yup you are absolutely spot on. Just Eat also acquired City Pantry last year. They have certainly been aggressive in acquisitions. It's just seems like a game of marketshare domination to me.
> 1 example: they could take on debt from a Bank to make the purchase for example.
How is taking on debt, relevant to an all-stock deal? An all-stock deal means that Grubhub shareholders aren't receiving any cash, they are receiving $7.3B worth of JustEatTakeaway stock.
The only interpretation I can think of, is what the previous poster said - the existing shareholders of JET are getting significantly diluted
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).
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:
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).
> 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?
While it sounds like they're not doing this, yes, you can do this.
pretty much like you've described. When you're making up the valuation and spending your own currency there's no problem; you control both sides of the balance sheet
So it's an all stock deal and it seems Grubhub purchase will be greater than the market cap of Just Eat Takeway. How does that work? What about control of the board?
Also seems strange that a $500mm revenue company is acquiring a $1.6bb company. All the financials for just eats are terrible. I am so confused on this acquisition and why shareholders approved.
I am a bit confused by the legal structure of this business:
Article states that just eat is dutch, but it is not based in the Netherlands.
It is a UK company that used to be based in Denmark.
According to Wikipedia it recently merged with Takeaway but is still operating as a subsidary with its own brand.
Just Eat was a UK based company which was public on the London Stock Exchange (LSE). It was then bought out by Takeaway.com (Thuisbezorgd.nl) based in the Netherlands and the company is now on the LSE (in the FTSE 100) and Euronext Amsterdam.
Just Eat was originally founded in Denmark but moved to the UK
Just Eat was founded in 2000 in Denmark, then moved to the UK in 2005. It floated on the London Stock Exchange in 2014 and acquired by Takeaway.com (Thuisbezorgd.nl). It's now Just Eat Takeaway.com and trades on the LSE and Euronext. The head office is in Amsterdam now as well, but the whole UK engineering team is still in London and Bristol in the UK.
So the parent company is Just Eat Takeaway.com but then it's Just Eat in the UK (and much of Europe), Takeaway.com in the NL (well, Thuisbezorgd.nl), and a few other names around the globe like Menulog (AU/NZ), and Skip the Dishes (CA).
In general, confusion around this subject stems from the fact that some jurisdictions focus on place of incorporation, whereas others look to the location of the principle place of business.
So you can have a company that is incorporated in the Netherlands, but which has its principal place of business in London. Depending on who you’re talking to, this is either a Dutch business or a British business.
A maneuver like this would often be done for tax purposes.
Just eat was acquired by Takeaway which is a Dutch company. From your link "It was listed on the London Stock Exchange until it was acquired by Takeaway.com in February 2020."
I hate Just Eat in my country. For the life I couldn't get them to put VAT on my receipt. Stopped ordering food almost completely because I was tired of something simple like that failing over and over. Now they're slowly turning into a monopoly, can't imagine how bad their service will get at that point.
My question: how is this allowed? Won't this create a massive monopoly?
I and many others had the same concerns when Just eat bought Hungry House. Now we've got Deliveroo and Uber Eats too, but how can a smaller player survive with these behemoths?
They wish. Just Eat are just using Grubhub as a way to enter US market. But, theres already too many players in US. Doordash, Postmate, Grubhub, Uber Eats
I had a real laugh when Dara Khosrowshahi tried to argue that the "market" uber eats is competing in should include home grocery shopping so that he could claim that they're competing against Amazon and Walmart, despite Amazon and Walmart literally not offering a competitive alternative to 99% of Uber Eats business.
Market consolidation would limit competition and hurt consumers so I'm glad they were purchased by an external player. But local restaurants are still hurting from exorbitant fees and something needs to be done to help.
Shameless plug: I'm working on a chrome extension that compares the price of your order across delivery services to get you the best price. We'll soon be linking to restaurants' websites to let people order direct and save on fees. For those interested, link is here: https://platerapp.app.link/1VRKKwGAe7
I totally agree. By the way, I checked out the extension you are working on and it’s amazing. This is a no brainer solution and I expect it to go viral. Kudos on thinking about it and sharing it! Exciting...!
These companies do realize that these numbers are incredibly not locked in right? Like Grubhub's business could be taken in a week by any other app because they don't own the endpoint, just the middleman. Sure they have some exclusive deals but this is an incredibly inflated value for what is effectively a API connection and little actual market ownership.
I bet GrubHub realizes it can get an even bigger payday later on when either Uber or DoodDash will need to acquire it. That's probably why they didn't want to consolidate with Uber immediately.
Actually, Just Eat was originally Danish and moved to UK in 2005, so it is British.
In any case, the company they are talking about is "Just Eat Takeaway", which is the result of the purchase by Dutch company Takeaway.com of British company Just Eat in February 2020, so it is in fact Dutch.
It seems they were basing that off of Takeaway.com, one half of the Just Eat Takeaway merger. And now the company is based out of the UK, so who knows why they went with Dutch.
Yup, I meant that they will put in a higher bid, or they might buy this new combination.
This area is strategically important for them, and if you’ve read previous merger/M&A stories or books about them, this seems just like the first salvo.
"Uber also believed it would would need to stop several undesirable business practices from Grubhub, including phone charges and cybersquatting, or buying domain names with the intent to profit from them. Grubhub has denied cybersquatting in the past. "
https://www.cnbc.com/2020/06/10/uber-exasperated-with-grubhu...