Uber Looks to Raise $750 Million in Notes Offering

Following rumors of a potential Grubhub tie-up, Uber is looking to raise $750 million for what 'may include potential acquisitions and strategic transactions.'

Ride-hailing and food-delivery giant Uber Technologies  (UBER) - Get Report on Wednesday revealed that it was looking to raise $750 million in a note offering - a day after reports that it was in discussions about a potential tie-up with food-delivery rival Grubhub  (GRUB) - Get Report.

In a filing with the Securities and Exchange Commission, San Francisco-based Uber said it was proposing to offer $750 million of five-year senior notes, of which it will use the proceeds " for working capital and other general corporate purposes."

The announcement comes a day after rumors of Uber making overtures to food-delivery rival Grubhub, whose shares surged nearly 30% on Tuesday after media reports that the two companies were in talks about joining forces.

While premature to consider what terms a potential Uber-Grubhub tie-up might have, the note offering ties suggests that Uber may be looking to beef up its cash position in order to secure Grubhub or other potential acquisition targets. 

Uber also said in its filing that proceeds from the note sale "may include potential acquisitions and strategic transactions," though that language is generally standard for companies filing to raise capital.

Grubhub responded to the speculation on Tuesday, saying in a press release that consolidation "could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities."

With Tuesday’s spike in Grubhub's stock price, the company now has a market cap of roughly $5.5 billion. By contrast, at its current share price, Uber has a market cap of approximately $58 billion, including $10 billion in cash and $5.8 billion in additional debt.

To be sure, ride-shares have plunged over the past few months as the coronavirus pandemic and stay-at-home orders have shuttered economies globally. However, Uber's food-delivery business has continued to thrive.

Grubhub, too, has also benefited from the pandemic and shutdown. The company, which also owns Seamless, reported a 12% year-over-year sales increase for its first quarter and pointed towards a strong and profitable second quarter.

Shares of Uber were down 1.39% at $31.91 in trading on Wednesday. Shares of Grubhub were down 3.13% at $58.50.