GrubHub Could be next Amazon target

The hypothetical merger would be a “nice complement” to the Whole Foods purchase

 

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Research firm #Wedbush hypothetized Monday that #Amazon (AMZN) could look to acquire food delivery company GrubHub (GRUB) following its Whole Foods (WFM) deal.

GrubHub Inc. provides an online and mobile platform for restaurant pick-up and delivery orders in the United States. The company connects approximately 50,000 local restaurants with diners in approximately 1,100 cities.

POSSIBLE AMAZON TARGET

In an investor note Monday, Wedbush’s Aaron #Turner argued that #GrubHub “may be” Amazon’s next acquisition target after Whole Foods.

The ecommerce leader already tried an internally-developed delivery platform but achieved “minimal success.” Meanwhile, GrubHub has continued to successfully expand into new markets and an acquisition would allow Amazon to dominate food delivery, Turner argues.

The hypothetical merger would be a “nice complement” to the Whole Foods buy given their similar geographic and demographic overlap, the analyst contends, adding that Amazon could unlock synergies between GrubHub’s infrastructure and, for example, its own grocery delivery push.

Turner also believes it’s “not insignificant” that GrubHub is already fully integrated with Amazon’s #Echo device, arguing that that relationship could help “grease the pan” for a potential takeover.

Assuming a similar premium to Whole Foods, the analyst calls a deal price around $55 per share “well within the realm of possibility.” Turner reiterates an Outperform rating and $50 target on GrubHub.

PRICE ACTION:

Shares of GrubHub are up 5.3% to $45.62 in afternoon trading.

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