Highlights From Amazon-Just Eat Takeaway.com Collaboration

Amazon.com Inc AMZN agreed to acquire a 2% stake in Just Eat Takeaway.com N.V.'s JTKWY struggling U.S. meal delivery business Grubhub and offer its Prime members access to the service for a year.

Under the deal announced as part of Amazon's July "Prime Day" promotion, Amazon customers will receive free delivery on orders over $12 in the 4,000 cities where Grubhub operates.

The deal aims to boost traffic for Grubhub, leaving a neutral impact on Grubhub's 2022 earnings and cash flow and be earnings and cash flow accretive for Grubhub from 2023 onwards.

Just Eat Takeaway, Europe's largest meals company, lost 70% in market value in 2022, Reuters reports. Shareholders urged it to sell or find a partner for Grubhub, which it acquired in 2021 for $5.8 billion in shares.

Grubhub lost out to DoorDash, Inc DASH and Uber Technologies, Inc UBER Uber Eats upon pandemic recovery.

In exchange, Amazon will receive warrants representing 2% of Grubhub's shares and an additional 13% of shares conditional on the deal bringing Grubhub enough customers.

Grubhub's gross assets were worth €6.5 billion ($6.67 billion) at the end of 2021, and it made a pretax loss of €403 million.

JPMorgan analysts saw the move as bringing new customers and strengthening Grubhub's position in the U.S., comparable to a partnership Amazon has in Britain with Just Eat competitor Deliveroo PLC DROOF.

"While Grubhub is now only a smaller part of Just Eat Takeaaway's portfolio, representing about 20% of estimated 2023 revenues, this step improves JET's position in potentially selling (Grubhub)," analysts added.

DoorDash and Uber shares are falling after the announcement, with DoorDash giving up 7% and Uber giving up 3% in the premarket session. 

Price Action: AMZN shares traded lower by 0.35% at $113.10 in the premarket on the last check Wednesday.

Photo by Haydn Blackey via Flickr