Grubhub is facing 14 lawsuits from shareholders who are upset about the delivery provider’s proposed merger with Just Eat Takeaway, the company revealed in a federal filing Thursday.
In the suits, investors call the merger process “flawed and inadequate,” saying Grubhub executives were acting in their own self-interest and did not seek alternate buyers.
Last June, Dutch delivery giant Just Eat Takeaway announced its all-stock, $7.3 billion deal to acquire Grubhub, giving the combined company a massive presence in the U.S., U.K., the Netherlands and Germany.
Grubhub said all of the complaints “are without merit,” according to its filing with the Securities and Exchange Commission.
The angry investors, however, claim Grubhub “insiders” will benefit from the merger—not the company’s stockholders.
The lawsuits also allege that Grubhub withheld financial information from its proxy statement when announcing the merger, including specific financial projections.
Lead plaintiff Frank Ferreiro asks the court to invalidate the proposed merger while also compelling Grubhub to get a better offer for itself.
Despite surging traffic during the pandemic, Grubhub is not turning a profit. The company said its first quarter gross food sales were up 60% year over year, to $2.6 billion, with average daily orders climbing 44%. Regardless, Grubhub posted a net lost of $75 million for the quarter, as it was forced into heavy spending to keep up with demand and driver shortages.
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