UPDATE: May 12, 2020: Grubhub released a statement Tuesday commenting on reports of a potential merger with Grubhub. The statement reads: "While our policy remains to not comment on specific market rumors, we want to reiterate our views with respect to M&A-related matters given the current level of recent speculation. We remain squarely focused on delivering shareholder value. As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment."
- Uber approached Grubhub with an offer to acquire the food delivery company, Bloomberg reports in a story with unnamed sources, updated Tuesday. A deal could be reached as soon as this month, according to the publication. Grubhub is valued at about $4.5 billion and Uber has a market capitalization of roughly $55 billion.
- Grubhub's stock rose 25% on Tuesday following this news, but its stock was halted for a few minutes due to volatility, according to CNBC.
- Neither Uber nor Grubhub would comment on the report.
Uber set its sights on rival food delivery providers in the U.S. last year. A rumored merger with DoorDash reportedly fell through after DoorDash identified better growth prospects. Grubhub told Restaurant Dive in January that it has not been pursuing a sale, contradicting The Wall Street Journal's report that Grubhub had hired financial advisors to explore strategic options including an acquisition or sale. It's recent statement seems to echo a similar stance.
A merger with Uber could be a tough decision for Grubhub, the only food delivery company to post profits in recent years. Uber's food delivery division, Uber Eats, isn't expected to make a profit until around 2024. Uber Eats made improvements during the first quarter, with gross bookings growing 89% since April, and in early May, Uber Eats surpassed $25 billion in gross bookings annual run rate, according to an earnings call with investors. Revenues grew 124% during the quarter as well.
Uber Eats has also been leaving markets where it can't be the No. 1 or No. 2 operator, recently announcing that it will exit eight global markets by June 4. It sold Uber Eats India business to Zomato earlier this year. Given Uber Eats' momentum during the first quarter and its plan to leave markets and reinvest in dominant ones, it may not need to merge with Grubhub to make headway in the global food delivery industry. Whether or not there is a deal, experts have expected consolidation in this industry.