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Technology

Amazon Teams Up With Just Eat On US Food Delivery

Amazon has agreed to take a 2% stake in Just Eat Takeaway.com's U.S. 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, whose shares have fallen 70% this year as shareholders demanded it sell or find a partner for Grubhub, which it bought just last year for $5.8 billion (€5.65 billion) in shares.

In a note on the deal, Credit Suisse said the partnership should strengthen Grubhub.

There is "no crystallisation of value, albeit (the) door is open for more," the bank said.

Shares in Just Eat were up 14% at €15.70 at 0710 GMT in Amsterdam trading.

'Prime Day' Promotion

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.

"Amazon has redefined convenience with Prime and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers," commented Adam DeWitt, CEO of Grubhub.

Read More: Just Eat Takeaway Increases European Restaurant Commissions

Traffic Driver

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 at the end of 2021, and it made a pretax loss of €403 million in that year.

News by Reuters, edited by ESM – your source for the latest technology news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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