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Amazon Teams Up With Just Eat On US Food Delivery With Grubhub Investment

Amazon has agreed to take a 2% stake in Just Eat Takeaway.com's struggling US 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% 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 certaintainty any deal will be reached.

Strengthened Position

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% of estimated 2023 revenues, this step improves JET's position in potentially selling (Grubhub)," analysts wrote.

Shares in Just Eat were up 17% 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.

New Deal 

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% of Grubhub's shares, and an additional 13% 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 ($6.67 billion) at the end of 2021, and it made a pretax loss of €403 million in that year.

Read More: Just Eat Enlists Katy Perry To Front Its New Global Campaign

News by Reuters edited by Donna Ahern, Checkout. For more technology news click here. Click subscribe to sign up for the Checkout print edition

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