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Just Eat off the menu on reports Uber wants to gooble up Deliveroo

Uber has been pushing its own food delivery plans hard ahead of its planned IPO next year

Deliveroo courier
Uber wants to expand in food delivery

Just Eat PLC (LON:JE.) was under pressure on a report that rival delivery service Deliveroo is in the sights of ride-hailing app group Uber.

Bloomberg reported that Uber has started talks about a potential takeover, though these were at an early stage with Deliveroo’s management and investors said to be reluctant. Uber has been pushing its own food delivery plans hard ahead of its planned IPO next year and Deliveroo would instantly add scale in Europe to the Uber Eats operation.

A funding round in 2017 valued Deliveroo at more than US$2bn but any bid would have to be pitched much higher to have a chance of success, said the report. Deliveroo now operates in eleven countries and in more than 100 cites.

Food delivery a priority

Uber chief executive Dara Khosrowshahi is said to have prioritised food delivery as a growth part of the business.

Just Eat shares dropped 7% to 662p on the report.

Analysts had already been trimming price targets for the delivery app due to the increased competition especially from both Uber and Deliveroo.

Just Eat’s delayed move into delivery services means the group’s core customer base is still very much skewed towards the lower-price segment, JP Morgan analyst Marcus Diebel said recently.

Diebel said this brings “strategic disadvantages”, including the fact that the high to mid-price segment demands delivery and is already taken by first movers, Deliveroo and UberEATS, which are strongly gaining share outside London.

Quick facts: Just Eat PLC

Price: 749.8 GBX

LSE:JE.
Market: LSE
Market Cap: £5.12 billion
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