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Grubhub ‘cause of the public market’s loss’ below new proprietor, investor claims

Just 4 months after Grubhub was acquired by a Dutch firm, an investor says Grubhub is a dud that should go.  

On Monday, Cat Rock Capital Management despatched a letter to the board of Just Eat — the Netherlands-based firm that purchased Grubhub in June —  telling the conglomerate that Grubhub is dragging it down and “is the root cause of the public market’s loss of confidence in JET.”

Earlier this month, Grubhub founder Matt Maloney stated he’s stepping down from JET’s board in December to “pursue other opportunities.” 

Cat Rock Capital, a Greenwich, Conn.-based hedge fund, has been an investor in JET for the previous 4 years and has a 6.5 % stake, in keeping with the letter.

Cat Rock’s founder and managing companion, Alex Captain, writes that the Grubhub acquisition clipped JET’s wings and is the only motive the European conglomerate’s development has petered out.

A person holding a phone with the Grubhub app on the screen.
Instead of boosting development for Just Eat, Grubhub has slowed it down, an activist investor claims.
Bloomberg by way of Getty Images

“JET’s outperformance evaporated when it announced the Grubhub acquisition in June 2020, with the stock falling over 18 percent in the four trading days after the announcement,” in keeping with the letter.

What’s extra, JET administration is “distracted” by Grubhub, which has “caused investors to question JET management’s judgement and motivations,” Captain writes. 

JET’s “deeply depressed valuation” leaves it weak to takeover bids, in keeping with the letter.

Matt Maloney, Grubhub's founder, standing with his arms folded.
Matt Maloney based Grubhub and served as its chief government till it was acquired in June.
Bloomberg by way of Getty Images

Captain urges JET to promote Grubhub or spin it off and means that Walmart, Amazon or Instacart are doubtless patrons as they give the impression of being to beef up their grocery supply companies. 

If JET doesn’t take steps to dump Grubhub earlier than the tip of the 12 months, Captain warns, Cat Rock and “other investors” will take “additional action.”

Grubhub has been dropping market share in its greatest markets, together with New York City, to rivals Doordash and Uber Eats, as The Post has reported, and it’s below appreciable regulatory scrutiny in cities and states which have handed laws aimed toward cubing supply firms’ charges from eating places.

JET, for its half, acknowledged Grubhub’s “specific challenges today,” in a press release,  however insisted that its it’s poised for development. 

“It is a large and growing business with good underlying profitability,” in keeping with the assertion including “over time, it will be a participant in the consolidation of the wider US market as various players combine to optimise last mile delivery. The Just Eat management team expects to be involved in this consolidation when it comes and intends to do so from a position of strength that reflects the strategic value of Grubhub.”