Uber representatives are confused with Grubhub’s decision to merge with Just Eat Takeaway, citing a higher offer price and frustration over disagreements about how to characterize regulatory risks, according to people familiar with the matter.
“Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants,” said an Uber spokesperson. “That doesn’t mean we are interested in doing any deal, at any price, with any player.”
Grubhub and Just Eat Takeaway announced merger terms after the bell on Wednesday. Just Eat Takeaway offered 0.67 shares for each Grubhub share, an implied value of $75.15 for each Grubhub share based on June 9’s €98.60 Just Eat Takeaway closing price. Still, Just Eat Takeaway shares fell more than 10 percent on Wednesday’s news, lowering the offer to about $65.17 per Grubhub share.
Uber offered 1.925 shares for each Grubhub share, valuing Grubhub at $67.04 based on Wednesday’s close.
Just Eat declined to comment. A spokesperson at Grubhub couldn’t immediately be reached for comment.
Grubhub chose Just Eat’s proposal because of more regulatory certainty, two of the people said. Uber was still negotiating antitrust and regulatory issues with Grubhub this week and had grown increasingly concerned with deal leaks and a New York Times story published on Tuesday detailing predatory fee practices from Grubhub, one of the people said.
Uber felt its stock has more upside than shares of Just Eat, making it better currency for Grubhub shareholders, said two of the people. Some Uber representatives also questioned if Grubhub was more attracted to Just Eat’s offer because it would keep current Grubhub executives installed running the business.
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.
Grubhub felt increasing political pressure from several Democratic lawmakers who expressed concerns over a deal with Uber, which would create a new market leader in the U.S. online delivery space over rival DoorDash. In a letter to top antitrust officials last month, Sens. Amy Klobuchar, D-Minn., Richard Blumenthal, D-Conn., Patrick Leahy, D-Vt., and Cory Booker, D-N.J., urged the agencies to investigate the deal if it closed.
In a statement, Klobuchar said, “I have repeatedly raised concerns and advocated against a potential merger between Uber and GrubHub. During this pandemic, when millions are out of work and many small businesses are struggling to stay afloat, our country does not need another merger that could squelch competition. News that the Uber/Grubhub deal may not materialize would be good for both consumers and restaurants.”
Grubhub’s deal with Just Eat is unlikely to garner as much regulatory attention as its possible combination with Uber. The proposed Uber-Grubhub deal would have combined two of the three largest food delivery companies in the U.S.
The British competition authority just gave the green light in April for Britain’s Just Eat and Netherlands-based Takeaway to combine. At the time, the British Competition and Markets Authority said it was unlikely Takeaway would have been able to re-enter the British market in a significant way on its own without the merger.