Topline
Amazon on Wednesday signed a deal with Grubhub’s parent company to acquire a 2% stake in the American food delivery platform and add its Grubhub+ service to its Prime membership, a move that comes more than three years after the e-commerce giant shut down its own similar service in the U.S. amid stiff competition.
Amazon has agreed to acquire a 2% stake in Grubhub.
Key Facts
Grubhub’s Dutch parent company Just Eat Takeaway announced all Amazon Prime members in the U.S. will receive one year of free access to Grubhub+—a $10/month subscription service that allows users to order food with zero delivery fees.
Just Eat expects the deal to expand Grubhub+’s user base without having an impact on the company’s earnings and cash flow for this year.
The deal between Amazon and Just Eat will renew every year unless either company chooses to terminate it.
As part of the deal, Amazon may choose to increase its stake in Grubhub up to 15%.
Just Eat noted it is also pursuing either a partial or full sale of Grubhub.
The price of Just Eat’s Amsterdam-listed shares have surged since the deal was officially announced and they were up 18.84% during early afternoon trading.
Key Background
The addition of Grubhub to Amazon Prime’s bouquet of services is not the tech giant’s first attempt at tackling the restaurant delivery market. In 2015, the company launched Amazon Restaurants, a service that allowed Prime members in several U.S. cities to order food delivery from local restaurants. The company however failed to compete with the likes of Grubhub, Uber Eats and Postmates and was eventually forced to shut down in 2019. Last year, Amazon signed a deal with Just Eat’s competitor Deliveroo to offer its free delivery service to Prime members in the U.K. and Ireland. In 2019, Deliveroo raised $575 million in a venture capital funding round led by Amazon. Just Eat in 2020 beat out Uber to acquire Grubhub for $7.3 billion. The acquisition—which was intended to give the European delivery giant a presence in the U.S.—though has faced pushback from its investors.
Further Reading
Amazon buys stake in US food delivery service Grubhub (Financial Times)
Amazon Strikes Partnership Deal with Grubhub That Could Include Small Equity Stake (Wall Street Journal)
Source: https://www.forbes.com/sites/siladityaray/2022/07/06/amazon-bringing-grubhub-to-prime-users-after-buying-2-stake/