Amazon Prime subscribers will receive a free food-delivery perk after the e-commerce giant took a stake in Grubhub as part of a deal announced Wednesday.

Amazon revealed the promotion as a headline deal for its annual “Prime Day” sales event. Prime members who sign up for Grubhub+ through an Amazon portal receive unlimited free delivery on orders above $12 as well as discounts and other perks.

Grubhub’s subscription service normally costs $9.99 per month.

Shares of rival food delivery services plunged on news of the partnership. DoorDash’s stock fell more than 7% in premarket trading, while Uber shares declined about 3.5%.

Grubhub+ service is available in more than 4,000 cities and provides access to meal ordering from hundreds of thousands of US restaurants, according to Amazon. Existing Grubhub+ subscribers can also redeem the offer for a free year.

The deal represents a lifeline for Grubhubs’ Netherlands-based owner Just Eat Takeaway, shares of which have plunged about 70% so far this year. As recently as last week, Just Eat Takeaway said it was “actively exploring” a potential sale or strategic partnership for GrubHub.

“Amazon has redefined convenience with Prime and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers,” GrubHub CEO Adam DeWitt said in a statement.

Just Eat Takeaway said its partnership with Amazon was “expected to expand membership to Grubhub+, while having a neutral impact on Grubhub’s 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards.”

Under the agreement’s terms, Amazon will receive a 2% stake in Grubhub – with an additional 13% stake obtainable if the deal hits key performance targets, including driving an unspecified number of new customers to the platform.

Amazon announced the promotion ahead of its "Prime Day" event.
Amazon announced the promotion ahead of its “Prime Day” event.
REUTERS

Shareholders have questioned the European delivery giant’s ability to achieve profitability at Grubhub or successfully sell the US-based subsidiary after buying it for $7.3 billion, Reuters reported.



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