Following $16 Billion WhatsApp Deal, Is GrubHub Seamless Next?

Following $16 Billion WhatsApp Deal, Is GrubHub Seamless Next?

With Facebook Inc (NASDAQ:FB) paying a record $16 billion to acquire WhatsApp, a deal announced yesterday, the market environment may be right for additional tech IPOs, or at least that’s what GrubHub Seamless Inc., may be hoping.

The internet-based menu and takeout ordering service, formed last year in merger, may be preparing for an initial public offering, the Wall Street Journal is reporting.  Company officials have met with investment banks to facilitate an IPO, potentially occurring in the first half of 2014, the report says.

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Pre-IPO activity noted

Chicago-based GrubHub has engaged in a flurry of pre-IPO activity lately.  Last year GrubHub and New York-based Seamless merged, which was followed by T. Rowe Price Group Inc (NASDAQ:TROW) taking a stake in the combined firm.  In late January GrubHub and Foresquare announced they were launching a joint project.  As reported in ValueWalk, under the agreement, users can search for a restaurant through the Foursquare application and the GPS application inside the mobile phone will serve up participating restaurants.

Consolidation leads to IPO

There had been a significant amount of industry consolidation leading up to the IPO.  In 2011 Seamless, which has a list of who’s who investors including Aramark’s private equity group, Warburg Pincus LLC, Thomas H. Lee Partners LP, CCMP Capital Advisors LLC and Goldman Sachs Group Inc (NYSE:GS), acquired Dotmenu. For its part, Grubhub acquired and leading up to the merger with Seamless. Combined, GrubHub Seamless covers 600 cities and boasts 28,000 restaurants as active participants in the service.

The GrubHub Seamless service is free to users.  They generate revenue by taking a small fee off each order, paid by the restaurant. In 2012 they generated over $100 million in revenue, according to the report.

Dangerous to hazard a guess at GrubHub valuation

In light of the somewhat rich WhatsApp buyout price, it is unclear where the GrubHub Seamless offering might be priced. However, when T. Rowe Price Group Inc (NASDAQ:TROW)’s New Horizons Fund valued its 1.4 million shares, it placed a $12 million valuation in the fund’s prospectus.  Odds are the IPO valuation will be quite a bit north of that level.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)
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