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Uber Reportedly Negotiating to Pay $6 Billion for Grubhub

Uber would give Grubhub shareholders 1.9 Uber shares for each Grubhub share, knowledgeable sources told The Wall Street Journal.

Uber Technologies  (UBER) - Get Uber Technologies, Inc. Report reportedly is negotiating with Grubhub  (GRUB) - Get Grubhub, Inc. Report to buy the food delivery competitor for about $6 billion.

Uber would give Grubhub shareholders 1.9 Uber shares for each of their Grubhub shares under those terms, knowledgeable sources told The Wall Street Journal.

That would value Grubhub stock at $62.72, based on Uber’s closing price of $33.01 Wednesday. Grubhub shares closed at $58.18 Wednesday.

Grubhub was seeking 2.15 Uber shares per Grubhub share in the negotiations, the Journal reported Tuesday. But Uber apparently was unwilling to go that high. A deal hasn’t been finalized, so the final price is anyone’s guess, if a transaction comes to fruition at all.

Many analysts say there is room for only two major players in the food delivery market. Now there are four, with Postmates  and DoorDash being the other two.

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Barclays analysts said in a note Wednesday that Grubhub could fetch as much as $75 per share from Uber.

"In addition to meaningful upside, we note that this deal allows GRUB shareholders to participate in what we think could be a strong ride-hail industry recovery in 2020-2021," Barclays analysts, led by Deepak Mathivanan, wrote in a commentary cited by Markets Insider.

They see a “meaningful opportunity for both revenue and cost synergies."

In after-hours trading, Uber lost 0.67% to $32.80, after rising 1.91% during the regular session.

Grubhub firmed 0.09% to $58.19 in after-hours trading, after falling 3.73% during the regular session.

Over the past three months, Grubhub has gained 12%, while Uber has fallen 20%.