i_SVG Created with Sketch.

Capital Markets Elite Group is not a registered U.S. broker-dealer. It does not accept a U.S. Person as a client if that person was solicited by Capital Markets Elite Group. (The definition of “U.S. Person” is here.) Capital Markets Elite Group will rely on a certification from a potential customer that the potential customer either is not a U.S. Person or has not been solicited, directly or indirectly, by Capital Markets Elite Group and has not been induced by Capital Markets Elite Group to engage in securities transactions. In particular, they must certify that they were directed to this website by someone other than Capital Markets Elite Group. They must also certify that they understand that they will not be protected by U.S. laws, regulations and supervisory structures applicable to broker-dealers registered in the U.S. and they do not expect such protections to apply. You should give these certifications only if they are true. If you wish to proceed to the website knowing that, please click “Continue” below. Otherwise click “Leave Website”

Leave Website
Cash Back Promotion for the period 16th September 2024 - 15th December 2024. Click here for Terms and Conditions.

Level Up to $0 Commission Promotion for the period 16th September 2024 - 15th December 2024. Click here for Terms and Conditions.
Start Trading
Equities and ETFsOptions
CAP it ALLDAS Trader ProSterling Trader ProCompare Platforms
Pricing StructureEquities and ETFsOptionsMarket DataTrade Ideas Bundles
About UsTrends and InsightsContact UsFAQs
Start Trading Login
grubhub

Amazon Strikes Deal with Grubhub

Jul 6, 2022 | About 3 minutes

Ticker Symbol: JTKWY, AMZN

Amazon struck a deal with JustEatTakeaway.com unit Grubhub this morning, taking a stake in the food delivery business and offering the service to its U.S. Amazon Prime members at no additional cost for one year. Shares of Just Eat were up over 15% in morning trading, while Amazon shares were trading flat.

The deal comes at a fortuitous time for Just Eat, after the company’s shares hit an all-time low yesterday, down over 65% on a year-to-date basis. As a part of the deal, Amazon would offer its Prime subscribers free Grubhub delivery for one year and receive options for 2% of the subsidiary company. Amazon would also receive warrants to increase its holding in Grubhub to 15%.

The warrants vest based on a predetermined formula that measures the performance of the partnership and new customers added to both platforms. The monetary conditions of the deal, i.e., how much Amazon paid for options and warrants, were not disclosed. Just Eat had been considering selling its Grubhub unit which it bought last year for $7.3 billion. Bloomberg reported last month that the unit had received preliminary interest from Apollo Global and other private equity groups.

The company has also been under internal pressure after its Chairman of the Board stepped down abruptly in May, and its Chief Operating Officer came under scrutiny for personal conduct. Just Eat’s management also revealed in a statement in April that the Grubhub unit was losing customers across its key markets due to increased competition, from the likes of Uber Eats, Postmates, and DoorDash, and reopening which caused diners to shift from ordering delivery to eating out more often.

Chief Executive Officer of Just Eat, Jitse Groen, has been trying to revive the top line at the company while managing costs. The company pared its growth projections for 2022 and said gross transaction value would only grow by mid-single digits, down from an earlier estimate of mid-teens growth. The Dutch company also said that total orders on the platform in the first quarter only rose to 264 million, missing the average Wall Street estimate of 287 million orders placed. Management said it doesn’t expect earnings before interest, taxes, and depreciation to turn positive until at least 2023.

Amazon, meanwhile, gets to add yet another service to its Amazon Prime subscription, which could help boost its value proposition to customers considering canceling their membership. High global inflation has caused consumers to consider their subscription packages more carefully and to be more selective in the services they cut and those they keep. Grubhub has the third-largest market share of all meal delivery companies in the U.S. behind DoorDash and Uber Eats.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.