Just Eat Takeaway sells Grubhub at steep loss

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Just Eat Takeaway has struck a deal to sell Grubhub for an enterprise value of $650mn, years after buying the US business for billions of dollars at the height of the pandemic-driven food delivery boom, sending shares up 20 per cent.

The Netherlands-based group on Wednesday said it had reached an agreement with US-based Wonder Group to sell Grubhub, which it acquired in 2021 for $7.3bn. The company is expected to receive net proceeds of up to $50mn from the deal after customary adjustments.

Just Eat has been struggling to offload the unit since 2022 after it ceded to pressure from investors who wanted the group to sell assets. It has booked a series of impairment charges for past acquisitions including the US subsidiary.

Jitse Groen, Just Eat’s chief executive, said: “The sale of Grubhub to Wonder will increase the cash generation capabilities of Just Eat Takeaway and will accelerate our growth.”

Grubhub will be transferred with its $500 million of senior notes. Just Eat shares rose by 20 per cent in morning trading on Wednesday.

In 2022 JET wrote down the value of Grubhub by €3bn. Last year, it posted a €4.6bn impairment charge that included writedowns for the subsidiary Grubhub as well as Just Eat’s merger with Takeaway in 2020. In February, JET also booked another €1.5bn impairment charge from past acquisitions.

Wednesday’s update comes after the company last month posted an 11 per cent fall in orders and gross transaction value year on year in the third quarter, a measure of customers’ total spending on the platform including fees, in North America in constant currency.

The company said the deal’s enterprise value reflected the expectation that New York City fee caps would be amended in the near term.

Grubhub had a market share of 8 per cent in the US, according to data published in April by Statista, behind rivals DoorDash with 67 per cent and Uber Eats with 23 per cent.

Marc Lore, founder and chief executive of Wonder, said: “Bringing Wonder and Grubhub together is the next step in our vision to create the super app for meal time, re-envisioning the future of food delivery.” Wonder also acquired meal kit company Blue Apron in 2023.

In the financial year to the end of December 2023, Grubhub generated 237 million orders, gross transaction value of €8bn and adjusted earnings before interest, taxes, depreciation and amortisation of €94mn. Free cash flow before changes in working capital was negative €77mn.

Just Eat added the transaction also increased the food delivery company’s “ability to support investment in countries in which it has the greatest competitive advantage”, improves its gross transaction value growth and positively affects its capital structure and liquidity position.

Analysts at Bernstein in a note said the inability to sell Grubhub had weighed on Just Eat’s shares.

Completion of the deal is expected during the first quarter of 2025 subject to customary closing conditions including regulatory approvals.

The food delivery company said the sale did not impact its 2024 guidance.