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A Grubhub investor says the food delivery company violated securities law in a proposed merger with Just Eat for the benefit of executive officers and board members.
Lead plaintiff, Frank Ferreiro, filed a nationwide class action lawsuit in New York federal court on Tuesday on behalf of public shareholders who he claims are being cut out of a lucrative deal by Grubhub executives and board members. The deal concerns an all-stock transaction proposed in June of 2020 that would merge Grubhub with Just Eat, an Amsterdam-based company that also offers online food delivery.
Ferreiro alleges that, under the terms of the proposed merger, Grubhub would become a wholly-owned subsidiary of Just Eat. His class action lawsuit. claims that Grubhub executive officers and board members are attempting to cut out public investors in the $7.3 billion deal.
The class action lawsuit alleges that Grubhub investors will receive a portion of Just Eat stock if the merger goes through. Grubhub investors are not protected under the merger agreement, however.
“The dubious nature of the Proposed Transaction is laid bare considering the lack of protections against possible fluctuations of Grubhub common stock,” points out the lawsuit, which goes on to explain that “the consideration payable to Plaintiff is not insulated from fluctuations in Just Eat’s stock price, and Plaintiff is left in the precarious position of not knowing whether the consideration payable to him will decline further.”
Ferreiro accuses Grubhub executives of not conducting an appropriate market check on the proposed Just Eat merger, which has been pending for nearly one year. In addition, the class action says that executives and the Grubhub board have agreed to the merger in order to secure upper-level management positions with Just Eat. The deal also allegedly provides executives and board members “golden parachutes,” or millions of dollars in severance packages should they lose their positions with the company as a result of the merger – benefits that are not afforded to the plaintiff and other Grubhub investors.
The class action lawsuit alleges that Grubhub executives have failed to properly inform investors of the terms of the Just Eat merger, with insufficient regulatory filings and even misrepresentations.
Ferreiro is seeking a court order that will put a stop to Grubhub’s proposed merger with Just Eat and force executives to seek the highest price for the company, protect stockholders, and disclose material information about the deal.
Are you a Grubhub investor? Do you think you will lose out on Just Eat merger? Tell us about your experience in the comment section below!
The lead plaintiff is represented by Evan J. Smith of Brodsky & Smith, LLC.
The Grubhub Investor Class Action Lawsuit is Ferreiro v. Grubhub, Inc., et al., Case No. 1:21-cv-03945 in the U.S. District Court for the Southern District of New York.
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One thought on Grubhub Investor Files Class Action Lawsuit Over Just Eat Merger
What about door dash had a glitch in there system we got our food free 3 weeks later they tap in to any account you have used and take there money. Plus what about the extra fee you pay that varies from restaurants and they are fees your mot aware of but it’s free delivery yet there is a fee sometimes hired than delivery fee . Than if your food is messed up if you complain they might reimburse you 5 dollars for a 40.00 bill plus your delivery fee and there extra fee .