Home / Tech / Uber Eats has massive competition after 2 rivals agreed a $10 billion deal to become one of the world's biggest food delivery companies

Uber Eats has massive competition after 2 rivals agreed a $10 billion deal to become one of the world's biggest food delivery companies

Just Eat rider courier

  • Uber Eats, Uber’s food delivery arm, has major competition in Europe after two massive rivals agreed to a £8.2 billion ($10 billion) merger.
  • Dutch firm Takeaway.com has agreed to acquire the UK’s Just Eat, potentially creating the biggest food delivery company in the world.
  • Neither firm operates in the US, but have strong market share in the UK, Germany, the Netherlands, and Canada.
  • International players and local players like Deliveroo are duking it out to win food delivery, which is worth $35 billion, according to UBS.

Uber Eats is facing major competition in Europe after Dutch firm Takeaway.com has agreed to buy Just Eat in an all-share deal valuing the combined group, which will be one of the sector’s largest, at about £8.2 billion ($10 billion).

The companies, which revealed talks on Saturday, said on Monday they will have leadership positions in many of the world’s largest food delivery markets, including the United Kingdom, Germany, the Netherlands and Canada. Although neither firm operates in Uber Eats’ home market of the US, but the deal will up the competitive pressure.

London-listed Just Eat shareholders will receive 0.09744 Takeaway.com shares for each share, implying a value of 731 pence per Just Eat share, a 15% premium to their closing price on Friday, the two companies said on Monday.

Just Eat shares rose 21% to 775 pence, while Takeaway’s were up almost 5% following details of terms of the deal.

Activist investor Cat Rock, which has holdings in both companies, has been pushing Just Eat to merge with a rival such as Takeaway, which has been driving sector consolidation.

Takeaway completed the €930 million ($1 billion) takeover of the German activities of Delivery Hero this year, settling a costly battle for supremacy in the German food delivery market.

The company, which says it is the leading food deliverer in continental Europe, Israel and Vietnam, has argued that the online food ordering business will be highly profitable for just one player in each country.

Analysts at Investec said there was limited geographical overlap between the two companies, with the exception they believed of Switzerland.

“(This) means the opportunity revolves around leveraging technology spend and administrative costs, in our view, and the sharing of best practice” they said. “This is presumably not insignificant, but less attractive than if they overlapped.”

Just Eat shareholders will own about 52.2% of the combined group, which together had 360 million orders worth €7.3 billion ($8.1 billion) in 2018.

Just Eat chairman Mike Evans will chair the combined group, while Takeway.com chief executive Jitse Groen will assume the role of CEO at the company, which will be incorporated, headquartered and domiciled in Amsterdam.

Both large and smaller players such as Uber Eats, the UK’s Deliveroo, Spain’s Glovo, and many others are battling to carve out consumer and market share in food delivery.

According to UBS, the global food delivery market is currently worth $35 billion and could grow to $365 billion by 2030.

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