Just Eat Takeaway to acquire Grubhub for $7.3B
nytimes.com
nytimes.com
"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...
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.
If we do a whois on the URL, the registrar is TAKEAWAY.COM (so thuisbezorgd) who happens to have 90,237 more domains: https://whois.domaintools.com/afhaalrestaurantpikantochicken....
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.
Most of the times the results are:
- ad: order X on thuisbezorgd
- google widget about X
- 1) squated domain with thuisbezorgd order page for X
- 2) real domain of restaurant X
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.
If we do a whois on the URL, the registrar is TAKEAWAY.COM (so thuisbezorgd) who happens to have 90,237 more domains: https://whois.domaintools.com/afhaalrestaurantpikantochicken....
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 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 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.
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.
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.
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.
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)
I'm not entirely sure who you're referring to in your response, or if that was even directed at my response.
Could you elaborate on what exactly it is you're talking about?
> 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.
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.
I wish everybody would stop tipping.
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.
So, tip with cash instead of not tipping at all. It costs you the same, and the delivery person is paid more.
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.
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.
I would never have learned about local food places if it wasn't for that app.
Could you provide a source for that?
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.
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.
Some mergers have literally saved companies, some have ruined them, some are considered 'unsuccessful' for esoteric reasons and others successful for purely numeric ones.
96% on RottenTomatoes, critically acclaimed, 12th-most profitable release of 2016.
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.
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?').
DoubleClick
NeXT
Here are some businesses off the top of my head that are thriving because of their acquisitions.
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.
Please don't be so hostile.
Android was an acquisition.
YouTube was an acquisition.
Google Docs was an acquisition.
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.
Basically - it's an unscientific opinion
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.
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.
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.
From Grubhub "Revenues: $363.0 million, a 12% year-over-year increase from $323.8 million in the first quarter of 2019."
https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry
Takeaway wiped out the competition in EU and it was a billion € marketing budgets battle.
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'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.
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.
This wouldn't be a problem if it was a case of choosing between A) paying $15 to the restaurant or B) $15 to the restaurant plus $5 in delivery.
However, in reality you're choosing between paying A) $15 directly to the restaurant or B) $12 to the restaurant and $8 for delivery.
Hopefully the added volume of orders makes up for the $3 (made up numbers by the way), but I'm not so sure.
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?
If it's hot outside or whatever, it's still a small price to pay for doing the right thing.
Are United Statesians addicted to convenience?
Have you seen who we picked as president?
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.
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.
(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)
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.
Yes.
However the financial incentive is for these restaurants is to eventually have their own ordering systems.
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.
[1] Amazon/Deliveroo delayed decision: https://uk.reuters.com/article/deliveroo-ma-amazon/uk-regula...
[2] Amazon/Deliveroo CMA inquiry: https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry
[3] Just Eat CMA inquiry response: https://assets.publishing.service.gov.uk/media/5ec27cc1e90e0...
[4] Amazon close food delivery business: https://www.engadget.com/2018-11-26-amazon-closes-restaurant...
https://www.gov.uk/cma-cases/just-eat-hungryhouse-merger-inq...
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?
That's the relevant difference
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?
"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.
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.
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
Just Eat Takeaway is an NV / Dutch firm (also mentioned on their Wikipedia page [1]), here's their listing:
https://www.cnbc.com/quotes/?symbol=TKWY-NL
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).
While it sounds like they're not doing this, yes, you can do this.
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.
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 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).
I read it as "Just Eat, takeaway" not as a concatenated company name which apparently is "JET" on the LSE
https://www.londonstockexchange.com/stock/JET/just-eat-takea...
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?
Make sure your customers know you, and know you deal fairly.
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
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
If you can give away $7 billion in stock, clearly your company must be worth at least that much money, right?
This is a bullshit deal to drive up bullshit valuations for bullshit business models looking for dumb money.
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.
Transaction data is the gold standard in building personalized marketing/ads.
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.
Takeaway was originally Dutch.
Just Eat Takeaway is a Dutch company listed on London Stock Exchange since February 2020.