GrubHub Spikes After Report the Company Is Considering Options

(Bloomberg) -- Grubhub Inc. shares soared on Wednesday following a report that the struggling food-delivery company is considering strategic options, including a potential sale or acquisition.

Dow Jones wrote that the company had tapped financial advisers for help with a review of potential moves, and added that the review was still in its early stages. Grubhub spokesperson Katie Norris declined to comment, citing company policy concerning market rumors or speculation.

Mandeep Singh, an analyst at Bloomberg Intelligence, wrote that Grubhub “will likely be acquired by a larger competitor such as Uber or DoorDash,” or it could be taken private “given its bleak sales growth and margin view for 2020.”

A deal for Grubhub will likely imply a 30%-40% premium, Singh said, basing his calculation on TakeAway’s pending acquisition of Just Eat.

The news sparked a gain of as much as 19% in afternoon trading, Grubhub’s biggest intraday spike since July 2018. The report also triggered a halt for volatility.

Analysts have suggested that such a move was possible for Grubhub. In early December, Needham wrote that a takeout of the company was a matter of “when, not if,” calling it the “preeminent” acquisition target in the sector.

Grubhub has been struggling against intensifying competition, including newer entrants like DoorDash and Uber Eats. In October, the company gave a fourth-quarter outlook that was well below expectations, sparking a huge sell-off in the stock. While shares have yet to fully recover that lost ground, the stock has gained about 70% since then, including Wednesday’s jump.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley

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