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Uber Has Approached GrubHub For Takeover: Reports

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Uber  (UBER)  is reportedly approaching GrubHub undefined for a takeover, according to Bloomberg sources familiar with the matter. 

GrubHub shares rose 29% and Uber shares rose 6% Neither side has confirmed the news yet. Whether the deal is in cash or stock is also not yet confirmed, nor is the size of the transaction.  

GrubHub told TheStreet’s breaking news reporter Tony Owusu the company currently has no comment on the matter. Uber has yet to respond. 

With Tuesday’s spike in GrubHub share, it now has a market cap of roughly $5.5B. Ube’s market cap is around $58B, but it has cash of $10.8B cash and $5.8B Debt. It isn’t yet clear if Uber will raise debt for the purchase. 

Ride-shares have plummeted year-over-year during quarantine, as seen in Uber and Lyft’s  (LYFT)  earnings reports, but Uber shares have held up well because it has grown its Uber Eats business better than specced pre-virus. 

GrubHub, 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, hoping for an adjusted EBITDA result of $5 million, although it’s not yet consistently profitable. The company said it is seeing the considerable increase in volumes is due to shelter-in-place. 

GrubHub shares did fall after earnings, as the company said it is reinvesting all of its expected profits to start 2020 to capture customers during this unique tailwind. 

For Uber, the copamny may want to prepare for a new normal that could see it dominate in food delivery, in the face of what could be a hard ride-sharing business. 

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