Uber’s largest acquisition fails – will Uber Eats be starved of cash?

An Uber Eats courier is seen in Bucharest, Romania on May 1, 2019. (Photo by Jaap Arriens/NurPhoto via Getty Images)

It is no real secret that there were plans afoot for Uber Eats and Grubhub to combine forces, likely though an acquisition from Uber. This has not come to pass, with Uber Eats losing out to a major European food delivery service, who has bought Grubhub for the sum of $7.3 billion. It would have been Uber’s largest acquisition if successful.

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It was an opportunity for Uber Eats to drastically expand its pickup and takeout offerings in the North American market. If the deal went through, it would have owned a gigantic 55 percent of the food delivery market in the US. Currently it tracks behind Grubhub and DoorDash in this lucrative market.

Even if Uber Eats was Grubhub’s preferred partner for such a deal, it may have struggled to gain approval from anti-trust legislators. According to the Wall Street Journal, this is the main reason that Grubhub ended up being acquired by the European food delivery giant, Just Eat Takeaway.

Just Eat Takeaway is a Dutch company dominant in the major European markets. This deal has created what they claim in the “world’s largest online food delivery company outside of China.” Instead of launching their own brand in North America to gain a foothold in that market they instead opted to buy a major player outright. It will now put them in good stead to on DoorDash and Uber Eats.

Much like its parent company, Uber Eats is struggling to turn profit. In fact, in the last quarter it lost $313 million despite a drastic rise in delivery service demand while people stay at home due to the coronavirus pandemic. It will most likely still be some time for it to turn a profit.

“The hope for [Uber and DoorDash] investors was Uber and DoorDash would be able to carve up the North American food delivery market,” said a transportation marketplace expert. “And lead to two major players.”

With the parent Uber business losing $8.5 billion last year, there are concerns that Uber Eats will struggle to maintain operations if cash injections dry up. Ironically, if this is the case, there is a very good chance that DoorDash or even the new Grubhub could buy out the ailing Uber Eats business (which is what happened to its Indian-based business).