Uber likely to pull out out of its merger talks with Grubhub over antitrust concerns
Uber is likely to pull out of merger talks with Grubhub over antitrust concerns raised with the potential deal, sources told CNBC’s David Faber. Grubhub
will likely merge with a European company instead, Faber reported.
The news comes after several Democratic lawmakers expressed concerns over the potential deal, which would create a new market leader in the U.S. online delivery space over rival DoorDash.
In a letter to top antitrust officials last month, Sens. Amy Klobuchar, D-Minn., Richard Blumenthal, D-Conn., Patrick Leahy, D-Vt., and Cory Booker, D-N.J., urged the agencies to investigate the deal if it closed.
Grubhub had already been fielding interest from the two European companies, Netherlands-based Just Eat Takeaway.com and German company Delivery Hero, CNBC reported last week.
Shares of both companies went negative on the European exchange on Wednesay’s report. Grubhub shares were up 2% Wednesday and shares of Uber were down 5%.
In a filing following the report, Takeaway.com confirmed it is in “advanced discussions” with Grubhub about an all-share agreement. Takeaway’s stock went lower on reports that it was close to a deal.
A spokesperson for Delivery Hero said the company “does not comment on any market rumours,” but that it is “regularly looking at potential transactions to evaluate new opportunities.”
Representatives from Uber and Grubhub were not immediately available for comment.
Uber and Grubhub had struggled to agree on a price for the deal, sources previously told Faber, after pursuing merger talks on and off for about a year.
But Faber reported Wednesday that Uber’s decision to walk has more to do with the likely antitrust roadblocks.
The companies had agreed to a stock ratio of 1.925 Uber shares per share of Grubhub weeks ago, Faber reported, but had not yet agreed on how to deal with the regulatory challenges and ways Uber would support Grubhub through the likely scrutiny.
The abandonment of the deal would likely be welcome news for several politicians and restaurant owners who were wary of further consolidation in the online delivery market.
Restaurant owners have complained for years of hefty fees from services like Grubhub but say their prevalence in the market makes the service difficult to abandon.
As restaurants have been forced to move to a delivery and pick-up only model during the pandemic, city councils in several cities across the U.S. have placed delivery caps on platforms like Grubhub.
source https://unv2news.blogspot.com/2020/06/uber-likely-to-pull-out-out-of-its.html
