OAKLAND, Calif. — Just Eat Takeaway, a European food delivery service, said on Wednesday that it was in advanced talks to buy Grubhub, a deal that would give it a foothold in the United States.
The proposed deal would be an all-stock transaction, Just Eat Takeaway said in a statement. Its stock fell about 13 percent on the news; Grubhub’s stock rose 7 percent.
Uber had been in talks to buy Grubhub, but those discussions foundered over price and regulatory concerns, said a person with knowledge of the discussions, who was not authorized to speak publicly. If Uber had bought Grubhub and combined it with Uber Eats, the result would have been the largest food delivery service in the United States, with about a 55 percent market share. That had attracted antitrust scrutiny.
“A further announcement will be made when appropriate,” Just Eat Takeaway said in its statement.
Grubhub did not immediately respond to a request for comment. Uber declined to comment. The Wall Street Journal reported earlier that Just Eat Takeaway was nearing an all-stock deal for Grubhub.
The talks for Grubhub have heated up as food delivery has become more popular in the coronavirus pandemic. People have turned more toward services such as Grubhub, DoorDash and Uber Eats as restaurants shut down in-room dining during the early phases of the outbreak. Restaurants are slowly beginning to reopen.
Even so, profits in the food delivery business have been elusive. Uber Eats, DoorDash and Grubhub have all spent millions of dollars on marketing and incentives to lure customers away from the others. Grubhub, which had been profitable, began losing money as it spent more to fight off rivals.
“Competition and pricing pressure will be fierce going forward,” said Daniel Ives, managing director of equity research at Wedbush Securities.
That has led to deal making. In 2018 and 2019, there were 25 mergers and acquisitions in food delivery, valued at a combined $20.12 billion, according to Linklaters, a global law firm.
Food delivery services in the United States also face regulatory headwinds. In California, Uber and DoorDash are challenging a law that requires them to reclassify their independent contractors as full-time employees. And in several cities, lawmakers are considering caps on the fees that delivery services charge, which restaurant owners have said are exorbitant.
Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon.
Just Eat Takeaway is run by a Dutch entrepreneur, Jitse Groen, who founded Takeaway.com in 2000 when he was a student frustrated with the challenge of ordering pizza online. Mr. Groen took Takeaway.com public in 2016. He now has a net worth of more than $1.5 billion, according to Forbes.
In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German portion of Delivery Hero’s business for about $1 billion in 2018.
Just Eat and Takeaway.com traditionally focused on providing software to restaurants so they could coordinate their own deliveries, a more profitable business model than supplying drivers to make the deliveries. But the combined company is building out its own fleet of drivers. This year, Just East announced a partnership to deliver food for McDonald’s in Britain and Ireland.
Kate Conger reported from Oakland, and Adam Satariano from London.