Please ensure Javascript is enabled for purposes of website accessibility

Grubhub and Uber May Be Haggling Over Price as Uber Sells Bonds to Raise Cash

By Rhian Hunt – May 14, 2020 at 3:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Grubhub might want approximately $8 per share more than Uber is offering.

Sources closely involved with the two companies claim that Grubhub (GRUB) and Uber (UBER 2.53%) are currently trying to hash out a sale price as Uber attempts to buy up Grubhub in the midst of the COVID-19 pandemic. Grubhub is still declining to reveal if it actually intends to sell itself, though the company remarked "consolidation could make sense in our industry" in a statement, according to Reuters.

According to the sources, Uber wants to acquire Grubhub for around $6 billion, basing the deal on a share valuation that makes each Grubhub share worth 1.9 Uber shares. Grubhub, on the other hand, apparently wants each of its stock to equal 2.15 Uber shares. The Uber price would value Grubhub shares at around $62 apiece, while Grubhub's valuation pegs them at roughly $70 each.

Negotiations in progress.

Image source: Getty Images.

It's still impossible to say whether the two companies are moving toward a compromise. Some observers speculate that Uber needs to balance the possibility of getting a better acquisition deal in the future against the chance a rival might snap up Grubhub in the meantime. CEO Jesse Reyes of equity advising firm J-Curve Advisors noted that Uber could "wait a bit longer and probably get them cheaper. But it could be that you have a lot of cats circling the same bowl."

Any deal might also have to clear potentially formidable regulatory hurdles before being finalized. However, Uber appears to be raising cash, with a $900 million bond sale yesterday selling five-year notes with a 7.5% yield. Uber says the net proceeds will be used for purposes that "may include potential acquisitions and strategic transactions."

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GrubHub Inc. Stock Quote
GrubHub Inc.
GRUB
Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
UBER
$27.57 (2.53%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.