Just Eat Takeaway.com continues its expansion

Just Eat Takeaway.com continues its expansion

16 July 2020Reading time: 4 minutes

In June 2020, the European food delivery leader Just Eat Takeaway bought the American company Grubhub and is likely to become the largest food delivery company. Food delivery is one of the few sectors which was not only spared by the current COVID-19 crisis, but which actually benefitted for the crisis. However, the sector is facing several challenges and is currently consolidating.

 

Just Eat Takeaway buys Grubhub

Takeaway.com continues its expansion. After the takeover of Just Eat in January 2020 for about GBP 6.2 billion (the British competition authority approved the deal end of April 2020), Just Eat Takeaway.com announced on June 10th 2020 that it will buy the American food delivery company Grubhub for about USD 7.3 billion. The transaction is expected to occur in the first quarter of 2021. Just Eat Takeaway was not the only company interested in buying Grubhub, but with USD 75.15 per Grubhub share, they made the best offer. Uber, which is also present in the food delivery market with Uber Eats, was interested too in buying Grubhub but was outbid by Takeaway.

According to Just Eat Takeaway.com, the company will become the largest food delivery company outside of China.  This is the result of Takeaway.com’s growth strategy. In the last years, the company bought several competitors to strengthen its position in the food delivery market. For example, in December 2018 the company acquired Delivery Hero’s Germany businesses. The same year in July, Takeaway has also bought the Israeli food delivery company 10bis.

Because of this expansion, Takeaway’s revenues increased substantially between 2018 and 2019. According to Takeaway’s 2019 full year report the revenues grew from EUR 232 million in 2018 to EUR 415 million in 2019. However, this expansion strategy also induces costs and according to Reuters Takeaway’s net loss increased from EUR 13.8 million to EUR 103.1 million in 2019.

Before the purchase of Grubhub, Takeway was not present in the United States and Canada. According to Just Eat Takeaway’s press release, Matt Maloney (Grubhub’s CEO) will lead the group’s North American activities to benefit from Grubhub‘s CEO experience and knowledge of the North American food delivery market. However, entering in a new market is often risky and there are several examples of acquisitions, which failed. The investors did not seem particularly enthusiastic about Takeaway’s CEO Jitse Groen: the Takeaway stock closed at EUR 82.24 on June 11th 2020 losing 3.8% compared to the closing price of the previous day. 

The food delivery market

According to Bloomberg, the food delivery market stand at USD 84.6 billion in 2018 and Bloomberg is forecasting a market size of USD 111.3 billion for 2020 and USD 138.4 billion for 2022. This sector was also one of the few, which benefited from the global COVID-19 crisis. Big food delivery companies were able to increase their market share in the first half of 2020. 

This market is also characterized by a strong competition between the different companies involved. This strong completion leads to low margins and some companies are suffering from profitability issues. As a result, the market is consolidating. As already mentioned, Takeaway bought or merged with several competitors. However, it is not the only company to do so. Delivery Hero, whose German business was taken over by Takeaway, expanded its Asian business by buying the South Korean company Woowa in December 2019. 

The food delivery market is likely to be more and more dominated by the big delivery companies like Delivery Hero, Uber Eats, Just Eat Takeaway and Meituan-Dianping (which has strong positions in the Chinese market).

Just Eat Takeaway.com stock overview

According to Bloomberg, eleven analysts recommend buying the Just Eat Takeaway stock, four recommend holding it and two recommend selling it.

On July 10th 2020 the Just Eat takeaway stock opened at EUR 94.60. The 52-weeks high of EUR 101.30 was reached on June 3rd 2020 and the 52-weeks low of EUR 62.30 was reached on March 12th 2020.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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14/08/2020 22:11:59