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Just Eat (GrubHub of Canada and the UK), and Takeaway.com (Same thing in Amsterdam) are merging. Consequently, shares of Just Eat (Ticker: JSTTY) went up by more than 19%. The celebration came after takeover news by Takeaway.com.
What does it mean for investors?
The company has been growing rapidly and steadily, with the most significant growth coming from its Canadian operations. The merger by Takeaway.com is perceived to be great news for investors. It will give the combined company the strength to compete with Amazon-backed delivery competitor Deliveroo. While this company has proven to be a well-managed and growing stock, the takeover news has pushed the stock to an overvalued range. There is no need to rush and invest now. The resulting company may still be worth investing in, once the merger is finalized and the dust is settled.
Zoom out, and now what does it mean?
Delivery-food wars and mergers are coming. Amazon shut down its food delivery and instead invested in Deliveroo. The combination of a very competitive market + delightfully entitled customers + and the need for delivery speed is killing these company's margin. There is not enough room for too many food-delivery apps. We should be ready for similar mergers and takeovers in the U.S. market. Low margin businesses, with high acquisition cost, and little to no customer loyalty need massive scale to become profitable and stay like that.
By the way, Just Eat's Stock Card is here: https://stockcard.io/JSTTY
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