News that Uber Technologies was making a takeover offer for Chicago-based meal deliverer Grubhub sent share prices for both companies higher Tuesday.
Shares of Grubhub rose 29% to $60.39 in trading Tuesday after the Wall Street Journal and Bloomberg News reported the offer. The Journal said a Grubhub proposal that valued its shares at $68 each was being reviewed by Uber’s board.
Grubhub declined to comment. Uber could not be reached. Uber’s shares were up 2.4% to $32.40 Tuesday after earlier rising more than 6%. Its Uber Eats division competes with Grubhub and others such as DoorDash.
The coronavirus has led more people to order food deliveries, but it’s also placed extreme stress on restaurants that work with the delivery services. While trying to replace a dine-in component that’s shut down, some restaurants have urged customers to order directly rather than through a delivery service that builds in its own charges.
Grubhub reported a first-quarter loss last week despite revenue that was 12% higher than a year ago. Grubhub said it is spending heavily to support restaurant partners during trying times.
“Grubhub is using nearly all of our profits in the second quarter to generate as many additional orders for our restaurant partners as possible. We hope that the darkest days are behind our restaurant partners and they can start focusing on the recovery,” CEO Matt Maloney said then.
“We are spending a little more on advertising, but more so in pricing, discounts and promotions for both restaurants and diners,” Maloney and CFO Adam DeWitt said in letter to shareholders. “Some of our spend will go toward creating as safe an experience as possible for diners, drivers and restaurants, including protective equipment for our drivers and new processes like contactless pickups and deliveries.”
The company reported a 24% increase in what it calls “active diners,” to 23.9 million. Grubhub had a loss of $33.4 million, 36 cents a share, in the first quarter versus a profit of $6.9 million, 7 cents a share, for the same period a year ago.