GrubHub Inc (NYSE: GRUB) is having an overwhelmingly strong day in the market today, and for good reason. Stories are surfacing all over the internet surrounding the fact that KFC and Taco Bell parent company, Yum! Brands Inc. (YUM) has made a large investment in the company. Today, we’ll talk about the investment, what we’re seeing from the stock, what this means for GRUB, and what we’ll be watching for ahead.
YUM Invests In GRUB
As mentioned above, GrubHub is having an overwhelmingly strong day in the market after announcing that Yum! Brands, the parent company to KFC and Taco Bell, has made a substantial investment in the company. In fact, the company announced that YUM invested $200 million through a private investment in public equity (PIPE) offering. In a statement, a GRUB spokesperson had the following to offer:
With the partnership, Grubhub is starting to work with franchisees to test and roll out online ordering for pickup and delivery to thousands of KFC and Taco Bell restaurants in the U.S.
As part of this investment, a Pizza Hut executive, Arthur Francis Starrs III, will be added to the GRUB Board of Directors. Here’s what the company had to offer with regard to the appointment of Mr. Starrs III in a regulatory filing:
The company has agreed to increase the size of its board by one additional director and to appoint Arthur Francis Starrs III, the President of Pizza Hut U.S., to the board as a Class III director with a term expiring in 2020, if appointed prior to the date of the company’s 2018 annual meeting of stockholders, or as a Class I director with a term expiring in 2021, if appointed after the date of the company’s 2018 annual meeting of stockholders.
What This Means For GrubHub
At the end of the day, this is a massively positive move for GRUB. Through the investment, the company is bringing in $200 million in funding. This will allow the company to greatly expand its services, improving revenue and earnings in the process. On top of that, under this investment, GrubHub will have even more capabilities when it comes to what it can deliver. Think about it, the company will be able to deliver pizza, tacos, fried chicken, and more through the deal. All in all, this is a massive win for GRUB.
What We’re Seeing From The Stock
As investors, one of the first lessons we learn is to keep a close eye on the news. After all, the news moves the market, and the updates surrounding GRUB is overwhelmingly positive. So, it’s no surprise to see that the stock is making a run for the top in the market today. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (11:58), GRUB is trading at $93.32 per share after a gain of $23.32 per share or 33.31% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on GRUB. In particular, we’re interested in following the story surrounding the company’s relationship with Yum! Brands and the doors this relationship opens. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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