How Uber Hailed a Deal With Grubhub Only to Let It Slip

In an Uber board meeting on Wednesday, CEO Dara Khosrowshahi agreed that the company should drop its pursuit.

Advertisement
By Reuters | Updated: 11 June 2020 17:46 IST
Highlights
  • Uber CEO Dara Khosrowshahi courted Grubhub for more than a year
  • Uber refused to commit in advance to specific concessions
  • Uber and Grubhub could not agree on the breakup fee that Uber would pay
How Uber Hailed a Deal With Grubhub Only to Let It Slip

Uber, believed to be Grubhub's sole suitor, was taken by surprise

Uber CEO Dara Khosrowshahi has spent much of his career deftly negotiating acquisitions. Yet his $6.5 billion (roughly Rs. 49,220 crores) all-stock bid for Grubhub ended with the food delivery company being acquired by European rival Just Eat Takeway.com.

A former Allen & Co investment banker, Khosrowshahi courted Grubhub for more than a year, and agreed a price in principle last month for an acquisition that would have boosted its Uber Eats division and given it an edge over rival Doordash, according to people familiar with the discussions.

Khosrowshahi and Grubhub's founder and CEO Matt Maloney had settled on a stock exchange ratio of 1.925 shares of Uber for each share of Grubhub, the sources said.

Left unresolved was a plan to get the deal approved by regulators, the sources added. Uber and Grubhub combined would account for more than half the US food delivery market, according to some analysts' estimates. The deal would almost certainly draw scrutiny from antitrust officials and politicians wary of big mergers that could lead to job cuts, as the economy reels from the COVID-19 pandemic's fallout.

Advertisement

That is when the negotiations stumbled. Uber refused to commit in advance to specific concessions it would make to regulators and politicians to see the deal through, according to sources close to Grubhub. From Uber's perspective, it was Grubhub that refused to address practices that could become issues in a regulatory review, such as its charges to restaurants and the "cybersquatting" of Internet domains, according to sources close to the ride-hailing giant.

The two companies could also not agree on the breakup fee that Uber would pay Grubhub were regulators to shoot down the deal, sources close to both companies said.

Advertisement

Other issues came up as well. Maloney wanted to head Uber's new food delivery division, a role Khosrowshahi intended for Uber Eats chief Pierre-Dimitri Gore-Coty, a source close to Uber said.

Just Eat Takeway.com seized on the impasse. After media reports of the talks between Uber and Grubhub surfaced last month, its founder and CEO Jitse Groen approached with his own all-stock offer, the sources said. Uber, believed to be Grubhub's sole suitor, was taken by surprise, the sources said.

Advertisement

With a market capitalisation of $60 billion (roughly Rs. 4.54 lakh crores), Uber was well positioned to outbid Just Eat Takeway.com, which has a market capitalisation of $15 billion (roughly Rs. 1.13 lakh crores).

Yet Khosrowshahi, who previously led online travel agency Expedia Group and built it up through a string of dealmaking, decided that Grubhub was one acquisition he should let go, even if this created a stronger competitor. He viewed Grubhub as unresponsive to Uber's efforts to hammer out a roadmap for getting the deal approved by regulators, two of the sources said.

In an Uber board meeting on Wednesday, Khosrowshahi agreed that the company should drop its pursuit. Just Eat Takeway.com inked a $7.3 billion (roughly Rs. 55,292 crores) deal with Grubhub later that day. Uber is not planning to come back with a new offer, the sources said.

"Like rides haring, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn't mean we are interested in doing any deal, at any price, with any player," Uber said in a statement.

Grubhub and Just Eat Takeway.com did not immediately respond to requests for comment.

© Thomson Reuters 2020


OnePlus 8 vs Mi 10 5G: Which Is the Best 'Value Flagship' Phone in India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts or RSS, download the episode, or just hit the play button below.

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Advertisement

Related Stories

Popular Mobile Brands
  1. Exclusive: Huawei Band 10 to Launch in India Priced Under Rs. 5,000
  2. India to Open Flagship EV Making Policy to Lure Global Giants
  3. Samsung Galaxy S25 Series Receiving New One UI 7-Based Update in Europe
  4. Realme C73 5G With 6,000mAh Battery Launched in India: See Price
  5. X's New XChat Feature to Offer Bitcoin-Style Encryption: Elon Musk
  6. Realme Narzo 80 Lite 5G RAM, Storage and Colour Options Tipped
  1. Samsung Encourages Users to Activate Latest Anti-Theft Features on Galaxy Devices
  2. Fujifilm Instax Mini 41 With Close-Up Mode Launched in India: Price, Specifications
  3. India to Open Flagship EV Making Policy to Lure Global Giants
  4. Meta Shareholders Vote Against Bitcoin Treasury Assessment Proposal 
  5. Elon Musk Says New XChat on X Comes With Bitcoin-Style Encryption, New Features
  6. Redmi Pad 2 4G Global Variant Confirmed to Feature a 11-Inch 2.5K Display
  7. Realme Narzo 80 Lite 5G May Launch in India Soon; RAM, Storage, and Colour Options Tipped
  8. Google AI Edge Gallery App That Can Run AI Models Locally Released on Android
  9. HMD Rubber 1 Smartwatch With Camera, WearOS May Launch Soon Alongside Rubber 1S
  10. Xiaomi 15 Ultra, Redmi Note 14 Pro+, Pad 7 Discounted in Xiaomi's Upgrade Days Sale
Gadgets 360 is available in
Download Our Apps
Available in Hindi
© Copyright Red Pixels Ventures Limited 2025. All rights reserved.