Uber Technologies (NYSE:UBER) has reportedly offered to acquire Grubhub Inc. (NYSE:GRUB) in an all-stock deal that could be finalized this month. This is seen as a move that will enhance its food-delivery service despite the company shuttering parts of the service abroad.
Grubhub wants 2.15 Ubers shares for each of its shares
Sources familiar with the matter indicated that the two companies are currently in negotiations and could finalize a deal as early as this month. Uber had approached Grubhub at the beginning of the year, and the source said that currently, the companies are deliberating on various issues, and the deal could fall through. Grubhub is demanding for 2.15 Uber shares for every Grubhub share.
The news comes months after it was reported that Grubhub was seeking to sell to DoorDash, Uber, as well as other parties. Currently, Grubhub’s market value is estimated at around $5.7 billion. Following the news, Grubhub shares surged around 39%. Uber’s market value is currently around $59 billion.
In a statement, Grubhub indicated that consolidation makes sense in the company’s industry, and like most companies, they are ambitious, and they are looking for value-enhancing prospects. The company added that it was confident with its current strategy and the latest initiatives of supporting restaurants during the current crisis.
Uber has not commented on the issues but indicated that it was not ready to comment on speculative mergers and acquisitions premiums. However, the company is always on the lookout for more ways of providing value to all customers across its segments.
Uber seeking to consolidate its position on food delivery
Uber may be looking to increase its share in the food delivery segment, which is currently dominated by DoorDash. According to a report released in October last year, Uber controlled only 20% of the market behind Grubhub and DoorDash that controlled 30% and 35%, respectively. The acquisition will catapult Uber Eats to first place, thus giving it a competitive advantage over DoorDash.
During the coronavirus pandemic, Uber Eats has seen a massive growth of around 52% from the previous quarter with gross bookings of around $4.68 billion.