Grubhub (GRUB) announced today that although it and Just Eat Takeaway.com (JET -7.46%) have received all the necessary regulatory approvals to complete their $7.3 billion all-stock merger, the two may need more time to complete the deal.
Grubhub says everything is on track and it still expects to complete the deal in the first half of 2021, but the two parties are extending the deadline to complete the transaction out to Dec. 31, 2021, from the original date of June 10, 2021.
The third-part meal delivery industry is undergoing a wave of consolidation. Uber Technologies (UBER -2.73%) is acquiring Postmates for $2.6 billion (and had sought to acquire Grubhub before it accepted the Just Eat Takeaway offer). And DoorDash, which is eyeing an IPO, acquired Caviar last year.
The coronavirus created a demand boom for delivery companies when restaurants were prohibited from offering dine-in options, but it hasn't improved the profitability of most providers.
Grubhub's profitability, for example, has eroded over time. Although it saw a 41% surge in second-quarter revenue, it still recorded a loss of $0.17 per share, a reversal from the profit of $0.27 per share from last year and its break-even position in the first quarter.
Grubhub and Just Eat Takeaway say the merger "is proceeding as expected." But to ensure Just Eat Takeaway has the time to complete all the steps necessary to finalize the deal, including registering its stock to trade on a U.S. exchange as American depository receipts (ADR), they're extending the deadline by six months.
Shareholders of both companies also still need to approve the merger.