Wonder Group Acquires Grubhub in $650 Million Deal
In a significant move, Wonder Group Inc. has agreed to purchase Grubhub from Just Eat Takeaway.com NV for approximately $650 million, a steep discount from the $7.3 billion valuation it reached during the early days of the Covid pandemic.
A Shift in Strategy
The transaction, expected to close in the first quarter of 2025, marks a major shift in strategy for both companies. Just Eat Takeaway.com will receive net proceeds of up to $50 million, which will increase its cash generation capabilities, according to CEO Jitse Groen. The company’s shares surged as much as 23% in Amsterdam, the largest jump since August 2022.
Industry Consolidation
The deal is a result of the consolidation wave sweeping the food delivery industry. During the pandemic, investors poured money into delivery startups, but as interest rates rose and demand fell, valuations plummeted. Just Eat Takeaway.com, which acquired Grubhub in 2021 to enter the US market, has been seeking to offload the company for years.
Wonder’s Transformation
Wonder Group, founded by former Walmart Inc. executive Marc Lore, has undergone a significant transformation since last year. Initially, the company planned to build a service based on a fleet of food trucks, but it abandoned the idea in early 2023 and pivoted to storefront locations. Today, Wonder operates 30 storefronts, mostly around New York and Philadelphia, and plans to reach 100 outlets by January 2026.
Grubhub Integration
Wonder will pay $142 million in cash and assume $500 million in Grubhub debt. The company will continue to operate the Grubhub app, while also bringing some of Grubhub’s partner restaurants onto the Wonder app. Lore has no plans to discontinue the Grubhub brand or Seamless, a Grubhub unit.
Avoiding Competition
By owning Grubhub, Wonder can avoid competing directly with its own restaurants in areas where it can simply steer customers to existing Grubhub partners. “If we go into an area where there are 20 Italian restaurants, we don’t need to have a first-party Italian restaurant,” Lore explained.
A New Chapter
The deal adds a new chapter to the history between Lore and Amazon.com Inc. Wonder will take over Amazon’s equity stake in Grubhub, but plans to continue the partnership. The final selling price of Grubhub reflects the company’s poor performance in recent years, which has been affected by Just Eat’s reduced marketing spending and rising interest rates.
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