Just Eat sells Grubhub for just $650 million after US sales decline

Just Eat agreed to sell Grubhub at a dramatic discount to the $7.3 billion it paid for the struggling US food delivery business just three years ago.

The group, which bought Grubhub in June 2021, told shareholders on Wednesday it would sell the unit to US rival Wonder Group for an enterprise value of $650 million.

Just Eat said the value of the transaction reflects expectations that New York City will modify its delivery fee caps “in the near term.”

The city currently limits how much third-party delivery services can charge restaurants for their services, and the proposed changes would allow companies like Grubhub to charge total commissions of up to 43 percent of the order total.

The US market has been a drag on Just Eat’s performance for some time and the group had already indicated plans for a full or partial sale of Grubhub.

Just Eat’s sales plummeted last month after the group revealed a sharp hit to sales due to an 11 per cent drop in gross transaction value (GTV) in North America during the third quarter.

The group said the sale of Grubhub would increase its “ability to support investment in countries where it has the greatest competitive advantage”, while improving liquidity, GTV growth and free cash flow generation.

The deal is expected to be completed in the third quarter, subject to regulatory approval.

Jitse Groen, Founder and CEO of Just Eat Takeaway, said: “The sale of Grubhub to Wonder will increase Just Eat Takeaway.com’s cash-generating capabilities and accelerate our growth.”

Just eat stocks it soared 19.8 percent to 1,127.32 pence at Wednesday’s open. They have fallen 88.7 percent from their October 2020 peak and 85.5 percent since their listing in February of that year.