After years of trying to make it in the U.S. market, Just Eat Takeaway is finally calling it quits on Grubhub. The European meal delivery giant, having paid a whopping $7.3 billion for Grubhub during the pandemic boom, is now letting it go to Wonder, a fresh-faced food delivery startup, for a mere $650 million. While that’s a staggering drop in valuation, Just Eat’s shares are celebrating, jumping more than 15% on the news. For Just Eat, this deal closes a costly chapter, freeing it from a market that has been more of a headache than a haven.
The Grubhub saga wasn’t exactly smooth. When Just Eat acquired Grubhub in 2020, meal delivery was soaring as lockdowns kept people indoors. But as the world reopened, those sky-high delivery app valuations began to plummet, and Just Eat found itself saddled with a challenging, heavily-regulated U.S. business. The situation worsened as New York City imposed limits on fees charged to restaurants, a rule that cost Just Eat around $100 million annually. CEO Jitse Groen’s team had been trying to offload Grubhub since 2022, navigating a tough M&A market for delivery services. This sale to Wonder, led by ex-Walmart exec Marc Lore, provides Just Eat with some closure, if not much cash.
Just Eat may only see $50 million in proceeds from the sale, but the company is framing it as a strategic move to focus on stronger markets like Britain, Ireland, and Northern Europe. Analysts had previously hoped for a valuation closer to $1.2 billion for Grubhub, but market watchers still see this sale as a win—proof that the company can shift its focus to more profitable regions and potentially increase shareholder returns. Investors now speculate that a share buyback might be on the cards, though Just Eat has kept mum on that front.
With Grubhub off its plate, Just Eat could look to exit more international markets, like Canada or Australia, to narrow the valuation gap with its European competitors. The company, which has already pulled out of New Zealand and France, seems keen to streamline its operations and focus on what’s working. If Wednesday’s stock surge holds, Just Eat may close 2024 with renewed investor confidence, reversing much of the 18% loss its shares had racked up this year. For now, it seems Just Eat’s big American dream may have come to an end, but it’s one that investors are eager to wake up from.
(Source: TechCrunch | Financial Times)
