Deal hungry Dutch billionaire defeats Uber to enter U.S.

Jitse Groen is a man in a hurry.

In just the last two years, the 42-year-old Dutch billionaire and chief executive officer of Just Eat NV has taken the food-delivery platform he created in his college dorm room two decades ago on a shopping spree, with more than $15 billion in takeovers.

The $7.3 billion combination with Grubhub Inc. he detailed on Thursday catapults Just Eat Takeaway into one of the world’s largest food-delivery companies and, according to JPMorgan Chase & Co., gives it the coveted No. 2 spot in the brutally competitive U.S. market. The deal will put Just Eat Takeaway slightly ahead of Uber Technologies Inc., whose own efforts to buy Grubhub snagged on price and antitrust concerns.

With the ink barely dry on his last deal — the $8 billion combination of Takeaway and Just Eat in Europe that U.K. regulators approved less than two months ago — Groen may be biting off more than he can chew with his U.S. foray, some fear.

Asked about the timing of the deal so close on the heels of another mega-transaction, Groen said to analysts and investors on a conference call Thursday, “if you ask me, something like this should have happened three years ago but I wasn’t the CEO of Just Eat back then.” Previous mergers made the deal attractive to Grubhub, he said.

Still, the U.S. market with its sliver-thin margins from an all-out price war between Uber Eats and market leader Doordash has created a “bloodbath,” according to ABN Amro analyst Wim Gille. There’s no protection for drivers’ incomes, restaurants have to pay high fees and customer experience is poor, he said.

With those concerns in mind, some Just Eat Takeaway investors gave the deal a thumbs down. Since Groen’s talks with Grubhub leaked Friday on CNBC, Just Eat Takeaway shares have dropped about 15%.

In the longer term, however, size is what may determine who thrives in the industry, Gille said.

“From a strategic point of view, this is the right thing to do,” he said. “In the long run, the winner in the U.S. will own potentially one of the biggest profit pools in the developed world.”

Some investors concur.

“Just Eat’s acquisition of Grubhub is clever and sensible,” said Alex Captain, founder and managing partner of Cat Rock Capital Management, a Just Eat Takeaway shareholder. “Just Eat is doubling its addressable market at a reasonable price through this acquisition.”

For Groen, getting into the U.S. marks a giant step in the journey that started 20 years ago when, as a business and information technology student at the University of Twente in the Netherlands, he came up with the idea of creating a food-delivery business.

The company he leads has operations in more than two dozen countries and had 415.9 million euros ($473.5 million) in revenue last year — almost four times that in 2016, when Takeaway went public on the Amsterdam stock exchange.

It has also made him a billionaire, with his 10.6% stake in Just Eat Takeaway valued at about 1.3 billion euros.

’His deal with Matt Maloney, his counterpart at Grubhub and an old friend, seems to have gone through relatively smoothly.

They both founded their food-delivery companies within a few years of each other. Maloney said he first met Groen in 2007 in Chicago, and the two have been in touch regularly ever since.

“We have the same company on different continents,” Maloney said in an interview Wednesday. “There’s this mutual cosmic alignment.”

Groen contacted him after hearing reports about Grubhub’s talks with Uber, Maloney said. When Groen learned the talks were turning serious, he moved in. Bloomberg reported that Uber had made an offer for Grubhub in May.

Uber and Grubhub agreed on a ratio that valued each Grubhub share at 1.925 that of Uber on the condition they settled on a framework for securing regulatory approval, two people familiar with the matter said. At Friday’s closing price, that works out to about $6.6 billion.

“Just Eat knew the bogey,” Maloney said. “They knew the price to beat.”

Even with his penchant for large deals, Groen’s interest in Grubhub seems to be recent. Or if he had considered a bid, he kept it close to his chest. Asked on an earnings call in early April if he had picked a target for this year, the CEO said “no.”

“It’s not like you can easily pick and choose M&A,” he added. “The stars need to be aligned.”

The stars haven’t always aligned neatly for Groen, but he has not been shy about tenaciously pursuing competitors he’s set his sights on.

When Takeaway snagged Delivery Hero’s German operations in late 2018, it snuffed out what had been an expensive rivalry in the country. The companies were at loggerheads, investing heavily in customer acquisition.

About half a year later, Groen’s company lodged a bid for Just Eat, which eventually prompted a counter-offer by Prosus NV for the U.K. firm. That set off an often-ugly, grueling, months-long bidding war before Takeaway declared victory in early January — but only after its rival had helped push up the price.

Now, armed with final regulatory approvals for the Just Eat Takeaway deal — the company has yet to file a joint earnings report — Groen has embarked on his next adventure with Grubhub.

He faces an industry whose competitive landscape is only going to intensify as tech giants Uber and deep-pocketed Inc. expand in the space. Smaller players are also clawing for market share, with Delivery Hero last year taking control of South Korea’s biggest food delivery app Woowa Brothers Corp. at a $4 billion valuation.

Still, the scale of Groen’s ambitions were evident when in an interview with Bloomberg in June 2018 he said that in his view “the most value is in being the largest, by far.”