Published - July 06, 2022 @ 12:13 PM (EET)
In a deal that gives the e-commerce giant the option to acquire a stake in the company, Amazon (NASDAQ:AMZN) agreed to add Just Eat Takeaway.com NV's Grubhub to its suite of Prime services in the U.S.
The Netherlands-based food-ordering company said in a statement Wednesday that Amazon has an initial choice to take a 2% stake in Grubhub and will have the opportunity to increase the holding to 15%.
The deal marks a significant relief for Just Eat, whose shares have fallen 70% this year as shareholders demanded it sells or finds a partner for Grubhub.
Chief Executive Jitse Groen at Just Eat is under pressure to restore growth after a slew of competitors took market share and restaurants reopening their doors to diners after being closed during the Covid-19 lockdowns.
For this year, the Amazon deal will be neutral for Grubhub's financial results and only add to cash flow and earnings starting in 2023, Just Eat said in a statement.
Just Eat, whose shares jumped as much as 16% in Amsterdam on Wednesday, bought Grubhub just last year for $7.3 billion. The Dutch company said, Just Eat will still own Grubhub and will continue exploring a full or partial sale of the U.S. business.
WHY IT MATTERS
Ahead of Prime's biggest savings event exclusively for members on July 12-13, Amazon announced Prime members in the U.S. will enjoy a free, one-year Grubhub+ membership with no food-delivery fees on eligible orders.
The deal brings the e-commerce giant further into food-related services through its Prime membership program, which has provided grocery benefits to Prime members through its Whole Foods Market division.
A few weeks ago, veteran analyst Doug Anmuth thoroughly examined Amazon's Prime loyalty program and released some inspiring results in a bullish report from JPMorgan Chase.
According to the analyst, the Prime subscription fee of just $139 offers subscribers a fantastic deal worth roughly $1,100 annually.
While Amazon shares fell 11.7% in June, which largely followed the negative trend of the overall stock market, Wall Street remains predominantly bullish on the stock due to its dominant position in e-commerce.
