Shareholder disputes roil Grubhub as it seeks merger

When you go to the Grubhub website, it says there are 1,757 restaurants serving Thai, Mexican, pizza, Japanese, salads, sandwiches, Chinese food and more – and that all of it can be delivered to Pasadena addresses within minutes.

Beneath the surface

By outward appearances, it’s business as usual at Grubhub, the popular online and mobile food ordering and delivery service. Beneath the surface, however, the company is facing 14 shareholder lawsuits alleging unlawful actions were taken a year ago when Grubhub announced a $7.3 billion merger with its European counterpart Just Eat Takeaway.

The lawsuits contain a variety of complaints against the company and its board members in the sales process: breaching fiduciary duties; filing false and misleading information; conflicts of interest; and inadequate compensation for shares of Grubhub.

‘Flawed and inadequate’

The merger process has been “flawed and inadequate,” according to one lawsuit, and was conducted with only one objective: to sell “the Company by any means possible no matter the price.”

Shareholders also complain that Grubhub didn’t sufficiently search the market for other potential suitors

QSR magazine reports that Grubhub rejects the claims, saying that it and the other defendants have complied with the law and have made all required disclosures.

More problems

Though the company says that it had a 38 percent increase in business year-over-year – with sales rising to $2.6 billion in the first quarter alone – it still suffered a net loss of $75 million.

In addition to the red ink and its shareholder dispute, it also faces restaurant backlash. Colorado lawmakers are considering a bill that would require Grubhub to get permission from a restaurant before taking any food orders from the eatery – if widely adopted, the law would present a new major obstacle for the company as it struggles to attain profitability.

Shareholder disputes divert attention and energy from a company’s daily operations and its long-term goals. An experienced Southern California business law attorney can help you successfully navigate the problem-resolution process.