What happened?
In the latest in a series of acquisitions, hungry Grubhub (GRUB +0.00%) has agreed to a deal to buy a peer company -- Foodler, a comestibles ordering company based in Boston.
Neither the terms nor the price of the deal was disclosed, although the acquirer admitted that it would be paying entirely in cash. Grubhub did say that Foodler will add around $80 million in annual gross food sales to its results. By comparison, Grubhub's figure for 2016 was almost $3 billion.
Grubhub CEO Matt Maloney said that owning Foodler "will enhance the Grubhub marketplace -- particularly in Foodler's hometown market of Boston -- allowing us to connect our diners with an even broader range of top-rated, popular local restaurants."
IMAGE SOURCE: GRUBHUB.
Does it matter?
Grubhub is very much in grow-by-expansion mode. It has pursued that strategy since the beginning of this decade, when it purchased rival Dotmenu in the wake of a pre-IPO financing round. Since then, it's merged with Seamless and opened its wallet to purchase such assets as Dining In, Restaurants on the Run, and LABite. Those latter three buys in particular helped the company build a solid core of delivery assets; Foodler will fit in well with this portfolio.
Without knowing how much Grubhub paid for its peer, it's tough to gauge how advantageous (or not) this deal is. The synergies are obvious, though, and Grubhub has been doing well lately -- revenue, profitability, and operating cash flow have all grown at very encouraging rates. So assuming the price for Foodler wasn't too rich, we can categorize this as a good acquisition for Grubhub, and a fresh reason for holding the stock.
