Just Eat Takeaway to buy Grubhub in £5.75bn deal

European food delivery app Just Eat Takeaway has agreed to buy US rival Grubhub in a $7.3bn (£5.75bn) deal.

If the takeover is completed it will create the world's biggest food delivery company outside China.

The combined firm will have more than 70 million active customers who place close to 600 million orders a year.

The announcement comes after talks between Grubhub and Uber failed as their potential merger faced competition scrutiny.

Just Eat Takeaway's chief executive Jitse Groen highlighted the importance to the deal's success of his long-standing relationship with his counterpart at Grubhub Matt Maloney.

"Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents," he said.

"Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector."

The deal comes amid a surge in demand for deliveries of takeaway food as people stay home because of the coronavirus pandemic.

Even before Covid-19, taken together Just Eat Takeaway and Grubhub last year reported revenues that totalled $3bn and a profit of $447m.

Analysts have said consolidation in the food delivery industry is long overdue as companies have to spend huge amounts of money to gain and retain their customers.

The deal, which still needs shareholder and regulatory approval, is expected to be completed in the first quarter of 2021.

Chicago-based Grubhub has had on-off takeover talks for some time with larger rival Uber.

But Uber signalled on Wednesday that it was no longer pursuing a potential tie up with Grubhub.

"Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn't mean we are interested in doing any deal, at any price, with any player," said Uber spokesperson Noah Edwardsen.

Just Eat Takeaway was created by the merger of the UK's Just Eat and Netherlands-based Takeaway.

The $7.8bn deal was given the go ahead in April this year after an investigation by the UK's competition authority.

Grubhub's shares rose by more than 4% in after hours trade in New York.