Uber In An Attempt To Acquire Competitor Grubhub

Uber In An Attempt To Acquire Competitor Grubhub

Uber In An Attempt To Acquire Competitor Grubhub

The two companies are continuing to discuss the combination, and Uber's board will consider it in the coming days.

Uber approached Grubhub after the pandemic hit, said one person with knowledge of the deal talks.

A merger would see Uber take control of 55 percent of the food delivery market by buying market strength in cities like NY and Chicago, according to a Wedbush analyst note.

Uber now operates uber eats, which is a Grubhub competitor in many countries.

It is expected that this increased level of interest from the regulators will continue, especially as food delivery players look to expand their offerings and services into broader markets. DoorDash, their chief competitor, controls around 35% of the market. First-quarter revenue generated from restaurant food deliveries increased 53% to $819 million as the coronavirus-related stay-at-home orders boosted demand for the service. The companies have also waived fees for struggling restaurants during the pandemic.

After Bloomberg reported the talks between Grubhub and Uber, Grubhub's shares soared 29 per cent, while Uber's rose more than 2 per cent.

"It (the deal) will definitely be scrutinized but I think it will pass. GrubHub and Uber will likely push back saying industry isn't profitable and need to consolidate to make it work", said Robert Mollins, an analyst with Gordon Haskett.

"We can not allow these corporations to monopolize food delivery, especially amid a crisis that is rendering American families and local restaurants more dependent than ever on these very services", Cicilline said in a statement.

GrubHub shares leaped 37% to $64.25, while Uber rose 6% to $33.37 in early afternoon US trading.

The discussions are a sign of how thoroughly the coronavirus has upended everything from the way that people are eating to how businesses must shift to find new growth.

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