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As it has become known, food delivery giant Grubhub is not going to run a selling process despite the rumors. After this news, its shares fell 6.7% to $52.02.
Recently, there appeared reports stating that American food delivery giant Grubhub is in talks with Walmart, Kroger, Albertsons, and Ahold-Delhaize. Some have rumored that the companies may acquire the leading food ordering and delivery company. The discussions around the news became even hotter after the comments of Brittain Ladd, ex-Amazon executive, and supply-chain consultant.
“I have spoken with executives from each company (especially Walmart) and there is interest in acquiring Grubhub. I believe the value of Grubhub to Walmart is that they could leverage Grubhub for delivering food and groceries.”
After the news appeared, Grubhub’s shares soared. On Wednesday, the company’s stock closed up 12.5 percent to $54.75 per share.
Tough Competition in Food Industry
As the Wall Street Journal reported, a sale is one of the possible strategic options for Grubhub as a result of tough competition on the food market. In particular, the company is in rivalry with Postmates, Uber‘s UberEats, and DoorDash. By the way, the latter is going to run an initial public offering (IPO) this year. Food delivery giant Grubhub has even invited financial advisors to evaluate the situation and find out all the possible solutions.
As for Grubhub itself, it was quick to deny the rumors about running a selling process.
Grubhub representative stated:
“While our policy is not to comment on rumors, given the considerable media speculation that appeared yesterday, we felt it was important to clarify that there is unequivocally no process in place to sell the company and there are currently no plans to do so. We felt it was important to clarify that there is unequivocally no process in place to sell the company and there are currently no plans to do so.”
Further, he added:
“We have always consulted advisers about a broad range of issues, including potential acquisition opportunities – that has not changed.”
It is noteworthy that after Grubhub denied selling, its shares fell by 6.7% to $52.02.
Chicago-based Grubhub is a popular online and mobile food ordering and delivery marketplace. It connects diners with local takeout restaurants. Its platforms allow diners to order from more than 140,000 takeout restaurants in over 2,700 U.S. cities and London. Among its brands are Grubhub, Seamless, LevelUp, Tapingo, AllMenus, and MenuPages.
It sounds incredible, but the company processes 457,300 daily orders. In September 2019, its net income made up $1 million on revenue of $322 million for the third quarter of 2019. Despite tough competition, as a result of which Grubhub lost about $3.7 million for the last quarter of 2019, the company is still profitable. Due to the convenience and user-friendly interface, Grubhub is one of the best food delivery app in the US.