GrubHub Inc (GRUB) shares jumped nearly 30 percent in the mid-day trading Tuesday following a report that Uber Technologies Inc (UBER) is in discussions to purchase the online food delivery firm in an all-stock deal.
The possible merger could help Uber Eats’ struggling restaurant delivery service to better compete with rival DoorDash. However, the two companies are still negotiating the terms of agreement and it still unclear if the two would be able to reach a deal.
Commenting on the report, analysts at Wedbush said in a note to clients that this would be an aggressive step by Uber to take out a key player on the Uber Eats front, beside further strengthening its market position.
Some analysts believe that a merger is long overdue in the market, which has seen surge in demand from customers stuck inside their houses due to prolonged lockdown because of coronavirus outbreak.
As of March, DoorDash was leading the meal delivery sales market with 42 percent share, followed by Grubhub with 28 percent and Uber Eats with 20 percent.
UBER shares rose 2.40 percent while GRUB shares climbed 29.07 percent in the previous trading session following the report citing merger talks.
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