Just Eat Takeaway.com appears to be having trouble selling Grubhub.
About a month and a half ago, the Netherlands-based delivery company announced that it was considering the sale of Grubhub, which it purchased for $7.3 billion. However, after struggling to find buyers, Just Eat has severely cut its asking price, and sources told the U.K.’s Sunday Times that Grubhub could sell for as little as $1.26 billion and that an acquisition may never happen.
“I’d be amazed if this does get done now because I don’t know how management can credibly stand up and go ‘you know, we’ve paid billions of dollars for this asset and now we’re going to take a massive bath on it,’” a source told The Times.
In April, Just Eat said management was working with advisers to introduce a strategic partner to Grubhub and/or the partial or full sale of the third-party delivery company. It also noted “there can be no certainty that any such strategic actions will be agreed or what the timing of such agreements will be.”
The company’s North America business, which includes Grubhub, gathered roughly 90 million orders in Q1, down from nearly 95 million in 2021. Overall, Just Eat took in 264.1 million orders in the quarter, a decline from about 267 million in the year-ago period.
Investor Cat Rock Capital Management, which owns about 6.5 percent of Just Eat, pleaded with the company in October 2021 to sell Grubhub. Founder Alex Captain said the company’s stock grew 329 percent from its 2016 IPO to the day before it was announced in June 2020 that it would acquire Grubhub. After that, stock underperformed by 69 percent.
Cat Rock Capital suggested Grubhub’s same-day logistics network would be of better value to a range of U.S.-based e-commerce and physical retailers, including Amazon.com, Walmart, Target/Shipt, Instacart, and Kroger.
At the time, Just Eat called Grubhub “a large and growing business with good underlying profitability.” The European company claimed to have an improvement plan in place to change its trajectory.
The multi-billion merger between Grubhub and Just Eat was first revealed in June 2020 after Grubhub and Uber’s negotiations fell through. When the transaction finalized in June 2021, the combined entity became the world’s largest online food delivery company outside China. Just Eat is the result of an $11.1 billion merger between U.K.-based Just Eat and Netherlands-based Takeaway.com in 2020.
The financial turmoil comes amid major leadership changes. Just Eat chairman Adriaan Nühn left the company last month and COO Jörg Gerbig stepped down because of an investigation into personal misconduct, TechCrunch reported.
“The Chairman’s decision to stand down recognises the concerns raised by our shareholders,” Just Eat told the publication. “Their strong support is important to ensure the Company can focus on the challenges and opportunities ahead. We understand and share the concerns that have been raised by our shareholders. We are working hard to address them with proposed actions that management is confident will position Just Eat Takeaway.com for continued success going forward.”