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Yelp Gobbles Up Eat24 For $134 Million To Fight GrubHub

This article is more than 9 years old.

The fight for food delivery has only just begun.

On Monday, local reviews site Yelp announced it acquired online food ordering startup Eat24 for $134 million in cash and stock. With the deal, Yelp jumps in to the food delivery space after dabbling in a partnership with Eat24 since July 2013.

It also signals Yelp's transition from simple reviews site that monetizes via advertising to a local ecommerce hotspot and puts it in direct competition with GrubHub, which staged one of 2014's biggest IPOs. GrubHub quickly ramped up to a $3 billion market cap since its NYSE debut last April, putting on par with Yelp in size, despite lower overall revenues.

Eat24, a smaller competitor to GrubHub, was founded in 2008. It serves as an online ordering engine for approximately 20,000 restaurants in 1,500 cities nationwide.

"Online and mobile food ordering is still in its infancy and restaurant and food searches are extremely popular on Yelp," CEO Jeremy Stoppelman said in a company blog post. "We believe that the acquisition of Eat24 will allow us to build a better, more seamless ordering experience for consumers that we can grow through 2015 and beyond."

Last week, Wall Street was unhappy with Yelp, dropping the stock more than 10% after it revealed slowing user growth in its latest earnings report. But investors seem bullish on this acquisition, pushing Yelp shares up nearly 6% in early Monday trading (GrubHub shares are down 2%). It helps that Yelp also increased its outlook, expecting full year 2015 net revenue to be up to $579 million and adjusted EBITDA to be up to $105 million because of the deal.

"Yelp has an impressive ability to connect its users directly with businesses," Eat24 CEO Nadav Sharon said in a statement. "This is an incredible opportunity to further connect with Yelp's highly engaged users and to expand our reach to even more local businesses on its platform."

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