In an effort to increase subscriptions with a renewed focus on food delivery, Amazon.com Inc. has acquired the right to purchase a 2 percent investment in Just Eat Takeaway.com’s Grubhub and will provide American Prime members free access to the service for a year.
The arrangement, which was revealed ahead of Amazon’s July “Prime Day” marketing campaign, which begins on Tuesday, enables Grubhub’s loyalty club members to utilise the online retailer’s services without paying delivery fees on purchases over $12 in more than 4,000 U.S. cities.
In trading in Amsterdam, shares of Just Eat Takeaway increased by more than 15% to 15.86 euros. For Europe’s largest food provider, whose shares had dropped by 70% this year, the deal is a huge relief.
Investors have asked that it sell or join up with someone for Grubhub, which it paid $5.8 billion for last year. Since the pandemic’s peak, demand has decreased, and Doordash and Uber Eats have gained market share.
In exchange for the arrangement attracting enough customers to Grubhub, Amazon will also obtain warrants worth an additional 2 percent of Grubhub’s shares and an additional 13 percent of shares.
Amazon’s stock increased by more than 1%, while shares of Uber and Doordash declined by almost 4% and 7%, respectively. It was stated in a statement by Just Eat Takeaway that the company is still “exploring the partial or complete sale of Grubhub,” but that there is no guarantee that a deal will be struck.
JPMorgan analysts said in a note on the Amazon arrangement that it will bring new customers and enhance Grubhub’s position in the US, similar to Amazon’s collaboration with Just Eat rival Deliveroo in the UK.