Two of the most prominent companies in the North American online food delivery market, Grubhub and Seamless, have merged, creating a company that will represent more than 20,000 restaurants in 500 cities across the United States. The deal is still subject to regulatory approval.
Online food ordering has become a huge market, but it has huge benefits for being a big player, and few to be neck in neck with a competitor. Like other online brands, like Netflix, Inc. (NASDAQ:NFLX), Google Inc (NASDAQ:GOOG) or Amazon.com, Inc. (NASDAQ:AMZN), food delivery will benefit from a single marketable name. It’s likely that the Grubhub Seamless merger will supply that firm.
According to an Associated Press report on the merger, orders through the two companies combined totaled close to $900 million in 2012, and the firm’s had a combined revenue of around $100 million. With the companies reducing costs by eliminating redundancies, and increased brand presence, the new vehicle might be uniquely well placed to grow in the food delivery market.
Grubhub Seamless Merger: Matt Maloney Will Be The CEO
The firms are waiting for regulatory approval before they announce what name they will be known under after the merger. Some details about the company’s new structure were released to the public however. Grubhub CEO Matt Maloney will be the CEO of the resulting firm, while Seamless CEO Jonathan Zabusky will take the title of president of the new company.
Neither of the companies are traded on the public market, but there may be some room for private equity to get involved in the new company. Seamless was spun off from international food services provider Aramark late last year. Before it was completely spun off PE investors pumped $50 million into the company. Seamless is the smaller of the two entities, representing about 12,000 restaurants in 40 cities.
Grubhub has also seen money come from private equity. Since it began operations, its pulled in PE investment of around $84 million. The company serves around 20,000 restaurants in 500 cities across the United States.
Food delivery is one of the areas that online business should fit into nicely, though it simply hasn’t yet. In a large market like the United States, a reasonable size is needed before a company in the area becomes truly useful, this merger might bring just that.
