Amazon has agreed to take a 2 percent stake in Just Eat Takeaway.com’s struggling U.S. meal delivery business Grubhub and will offer its Prime members access to the service for one year.
The deal is a major relief for Just Eat Takeaway, Europe’s largest meals company, whose stock had fallen 70 percent this year. Shareholders have demanded it sell or find a partner for Grubhub, which it bought just last year for $5.8 billion in shares.
Just Eat Takeway specified in a statement it continues to “explore the partial or full sale of Grubhub” though there is no certainty any deal will be reached.
In a note on the Amazon deal, analysts from JPMorgan said it would bring new customers and strengthen Grubhub’s position in the United States, comparable to a partnership Amazon has in Britain with Just Eat competitor Deliveroo.
“While Grubhub is now only a smaller part of Just Eat Takeaaway’s portfolio, representing about 20 percent of estimated 2023 revenues, this step improves JET’s position in potentially selling (Grubhub),” analysts wrote.
Shares in Just Eat were up 17 percent at 16.13 euros at 0838 GMT in Amsterdam trading.
Under the deal announced as part of Amazon’s July “Prime Day” promotion on Wednesday, Amazon customers will receive free delivery on orders over $12 in the 4,000 cities where Grubhub operates.
The deal will drive traffic for Grubhub, which has lost share to Doordash and Uber Eats as the impact of the COVID-19 pandemic wanes.
In exchange, Amazon will receive warrants representing 2 percent of Grubhub’s shares, and an additional 13 percent of shares conditional on the deal bringing Grubhub enough customers.
“The agreement is expected to expand membership to Grubhub+, while having a neutral impact on Grubhub’s 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards,” Just Eat Takeaway said in a statement.
The company said that Grubhub’s gross assets were worth 6.5 billion euros ($6.67 billion) at the end of 2021, and it made a pretax loss of 403 million euros in that year.
($1 = 0.9746 euros)
