Uber (UBER) has rejected an all-stock proposal to buy food delivery company Grubhub (GRUB) for 2.15 Uber shares per share of Grubhub, reports CNBC’s David Faber.
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According to Faber, the two companies have been in discussions about a deal for about a year, but have so far failed to agree on a price.
“We remain squarely focused on delivering shareholder value,” Grubhub wrote in a statement to CNBC. “As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.”
Meanwhile Uber wrote: “We are constantly looking at ways to provide more value to our customers, across all of the businesses we operate.” The company added: “We have shown ourselves to be disciplined with capital and we do not respond to speculative M&A premiums.”
According to Bloomberg, an agreement could be reached as early as this month. The news sent Grubhub shares surging 38%, before closing Tuesday’s trading 29% higher.
Overall, Wall Street analysts have a bullish outlook on Uber stock with 26 Buys, 2 Holds and 1 Sell- giving UBER its Strong Buy consensus. The $39.59 average price target indicates 22% upside potential lies ahead. Shares are currently trading up 9% on a year-to-date basis. (See Uber stock analysis on TipRanks).
“Clearly this would be an aggressive move by Uber to take out a major competitor on the Uber Eats front and further consolidate its market position, especially as the COVID-19 pandemic continues to shift more of a focus to deliveries vs. ride sharing in the near-term,” Wedbush analyst Ygal Arounian wrote in a report to investors on May 12.
He also added that he “wouldn’t rule out a bidding war with DoorDash.”
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