Just Eat Takeaway shares set to soar ahead of H1 earnings

Just Eat Takeaway continues to drive growth via acquisitions, its latest being a $7.3bn merger with US-based Grubhub, with investors eager for an update when it unveils its half-year (H1) results on Wednesday 12 August.

Just Eat Takeaway.com has seen its share price outperformer the broader market, driven by its inorganic growth strategy and an uptick in consumers ordering take out amid government-imposed lockdowns due to Covid-19.

The online food delivery company only recently rebranded following the merger of Just Eat and Netherlands-based Takeaway.com earlier this year, with the enlarged group announcing its plan to merge with US-based GrubHub in a deal valued at around $7.3 billion (£5.5 billion) in June.

The deal has been welcomed by investors and city insiders alike, with UBS analyst Hubert Jeaneau admitting that while the US market is a tough nut to crack for Just Eat Takeaway, it is large and relatively unpenetrated one that could see the company win big.

‘Past the initial surprise of the announcement, most investors we spoke to have started to take a long-term view on the potential upside from the US asset, while recognising near term challenges,’ Jeaneau wrote in a note.

‘European investors are less familiar with the dynamics of the US market, which is deemed highly competitive. Yet most investors regard JET's management highly and we expect to see a change in perception from negative to positive,’ he added.

The Just Eat Takeaway-Grubhub merger is expected to close in the first quarter (Q1) 2021.

Just Eat Takeaway M&A plans help lift shares

Just Eat Takeaway’s pursuit of inorganic growth has helped its share price soar more than 18% year-to-date, with the FTSE 100 still down 20% over the same period as the wider economy struggles to bounce back from the coronavirus pandemic.

The company’s latest deal with US-based Grubhub will see it create the world’s largest online food delivery service outside of China, with its management jumping in after rival Uber Eats backed away from its own merger attempt after facing competition scrutiny.

The deal will see longstanding CEOs and founders Jitse Groen (Just Eat Takeaway) and Matt Maloney (Grubhub) join forces to become a true global leader within the sector.

‘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,’ Groen said. ‘Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector.’

‘I am excited that we can create the world’s largest food delivery business outside China. We look forward to welcoming Matt and his team to our company and working with them in the future,’ he added.

Just Eat Takeaway is trading at £86.08 per share at the time of publication.

Competition heats up in Online food delivery after Uber acquires Postmates

Even though Uber walked away from its merger attempt with Grubhub, leaving the door wide open for Just Eat Takeaway, the US-based tech company swiftly turned its attention to another target, with it acquiring Postmates in July.

The deal is valued at $2.65 billion and will see Uber combine Postmates with its online food delivery service Uber Eats.

‘Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery—they can be a hugely important part of local commerce and communities, all the more important during crises like COVID-19,’ Uber CEO Dara Khosrowshahi said in a statement.

‘As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100% year on year, he added.

Update on McDonald’s delivery partnership

Investors will likely want to hear more about the delivery company’s new partnership with McDonald's.

The deal sees Just Eat become McDonald’s second exclusive delivery partner, with two companies implementing the partnership in 2020.

‘We are pleased to confirm uEBITDA towards the top end and revenue broadly in line with the guidance range we provided at the start of 2019, notwithstanding the significant developments during the year,’ Just Eat CEO Peter Duffy said.

‘This partnership, along with our recently announced relationship with Greggs, will require significant investment but will accelerate our growth ambitions and enhance our market position by offering our customers the widest choice available,’ he added.

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