Grubhub Is Still Too Pricey for a Takeover

Grubhub (NYSE: GRUB) stock was flying higher Tuesday after Bloomberg reported that Uber (NYSE: UBER) had made an offer to acquire the online takeout marketplace.

Grubhub stock rose as much as 38.8% on the news with its market cap reaching $5.9 billion, while investors bid up shares of Uber as well, showing approval of the deal from both sides. Shares of the ridesharing giant gained as much as 8.9%.

It's easy to see why investors cheered the potential deal. Profits have been squeezed in the industry in recent years by intense competition among Grubhub, Uber Eats, privately-held DoorDash, and to a lesser extent, Postmates. The dogfight for market share was grueling enough to send Amazon packing up its own restaurant-delivery business, Amazon Restaurants, while Square bowed out of the race, selling Caviar to DoorDash for $410 million last August.

Source Fool.com