Amazon has agreed to take a 2% stake in Just Eat Takeaway.com's struggling US 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, Europe's largest meals company, whose stock had fallen 70% this year. Shareholders have demanded it sell or find a partner for Grubhub, which it bought just last year for $5.8 billion in shares.
Just Eat Takeway specified in a statement it continues to 'explore the partial or full sale of Grubhub' though there is no certaintainty any deal will be reached.
Strengthened Position
In a note on the Amazon deal, analysts from JPMorgan said it would bring new customers and strengthen Grubhub's position in the United States, comparable to a partnership Amazon has in Britain with Just Eat competitor Deliveroo.
"While Grubhub is now only a smaller part of Just Eat Takeaaway's portfolio, representing about 20% of estimated 2023 revenues, this step improves JET's position in potentially selling (Grubhub)," analysts wrote.
Shares in Just Eat were up 17% at 16.13 euros at 0838 GMT in Amsterdam trading.
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.
New Deal
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 ($6.67 billion) at the end of 2021, and it made a pretax loss of €403 million in that year.
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News by Reuters edited by Donna Ahern, Checkout. For more technology news click here. Click subscribe to sign up for the Checkout print edition
