Will Amazon be Interested in Buying GrubHub?

GrubHub Inc’s (GRUB) share price fell 2.34% to close at $34.65 on Jun 26, 2014, following the news that Amazon.com (AMZN) is launching a food takeout service. (Read: Amazon Rolls Out Local Food Takeout Business)

Amazon’s entry will certainly create ripples in the booming food takeaway market. Its service is seen as a direct threat to GrubHub and DeliveryHero. Per TechCrunch, Amazon can also take the acquisition route to expand its services and GrubHub can be a prospective candidate, in our view.

With increasing usefulness of smartphones, popular mobile app developers are commanding a hefty premium for getting acquired. Priceline’s recently proposed acquisition of OpenTable and Facebook’s (FB) WhatsApp buyout are appropriate examples.

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