Should the Trump administration fight a proposed takeover of Grubhub by Uber? If the two companies unite, they’ll own 55% of the market for food deliveries. That’s a staggeringly large number in a very young industry.
Regulators might want to look at the path taken with Facebook. They allowed the social network to purchase Instagram and WhatsApp, delivering to it massive market share, and killing two of the best options for creating a competitive market. Since then, Facebook has been embroiled in scandal after scandal.
Cara Lombardo reports on the proposed deal for the Wall Street Journal, writing:
Uber Technologies Inc. UBER -0.48% and Grubhub Inc. GRUB -4.25% are discussing a takeover valuing Grubhub at roughly $6 billion, with big cost savings that would help pay for the deal, according to people familiar with the matter.
The companies are considering a deal that would value Grubhub stock at around 1.9 Uber shares, or just over $60 per Grubhub share based on trading Wednesday afternoon, the people said.
Grubhub had been seeking 2.15 Uber shares in the negotiations, The Wall Street Journal reported Tuesday, but Uber balked at paying that much. The potential price has jumped around since the latest discussions began in February and may continue to do so—assuming the talks continue.
Grubhub shares soared 29% Tuesday, the day the merger talks surfaced, closing at $60.39. They dropped to $58.14 Wednesday amid a broader market selloff. Uber stock closed up 1.9% at $33.02 after The Wall Street Journal reported on details of the discussions.
Uber and Grubhub see opportunity in the rapidly changing industry landscape. Meal-delivery companies have been scrambling to respond to increased demand as the coronavirus pandemic confines people to their homes and increases the cost of delivering food safely.
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