Grubhub Inc., an online and mobile food ordering and delivery marketplace, has hired a financial advisor to consider a sale.
Shareholders may not be happy with the announcement. The company’s share price has gone from more than $120 to less than $60 in less than one year:
The financial advisor may face certain issues. Among them, the total amount of goodwill represents 20% of the total amount of enterprise value:
See below the amount of money paid for the targets:
“On November 7, 2018, the Company acquired all of the issued and outstanding shares of Tapingo Ltd. (“Tapingo”) for approximately $152.1 million, including $151.7 million of cash paid (net of cash acquired of $1.5 million) and $0.4 million of other non-cash consideration. Tapingo is a leading platform for campus food ordering with direct integration into college meal plans and point of sale systems. The acquisition of Tapingo has enhanced the Company’s diner network on college campuses.” Source: 10-Q
“On September 13, 2018, the Company acquired SCVNGR, Inc. d/b/a LevelUp (“LevelUp”) for approximately $369.4 million, including $366.8 million of cash paid (net of cash acquired of $6.0 million) and $2.6 million of other non-cash consideration. LevelUp is a leading provider of mobile diner engagement and payment solutions for national and regional restaurant brands. The acquisition of LevelUp has simplified the Company’s integrations with restaurants’ systems, increased diner engagement and accelerated product development.” Source: 10-Q
Our Question: How will the financial advisor assess the value of these recent acquisitions?