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Uber Technologies Inc is in negotiations to buy online food delivery company Grubhub Inc in an all-stock deal, according to people familiar with the matter.

A merger could give Uber Eats' money-losing restaurant delivery service a leg up on market leader DoorDash at a time when the coronavirus pandemic has upended Uber's core business of shuttling people from place to place.

Uber and Grubhub are still haggling over the deal's stock exchange ratio, and there is no certainty that they will reach an agreement, the sources said.

The potential acquisition suggests that the Silicon Valley disruptor is doubling down on its fastest-growing service in a scramble to adapt to what is likely to be a long business interruption.

"This would be an aggressive move by Uber to take out a major competitor on the Uber Eats front and further consolidate its market position," Wedbush analysts said in a client note.

It could turn the crowded "US meal delivery market into a two-horse race," CFRA Research analyst Angelo Zino said.

An Uber spokesman said the company does not respond to "speculative M&A." Grubhub, in a statement, did not confirm the talks but said that "consolidation could make sense in our industry."

Experts said that consolidation is long overdue in the space, where demand from worried, home-bound consumers is surging.

DoorDash had a 42 percent share of meal delivery sales in March, versus 20 percent for Uber Eats and 28 percent for Grubhub, data from analytics firm Second Measure showed.

"If you can't beat 'em, eat 'em," said Jesse Reyes, chief executive of J-Curve Advisors, who advises venture capital and private equity funds.

Feeding Frenzy?

The value of the deal was undisclosed, but Grubhub had a market capitalization of about $4.3 billion, while Uber was valued at nearly $55 billion as of Monday's close, according to Refinitiv data.

Bloomberg News first reported on the deal talks on Tuesday.

Uber "can wait a bit longer and probably get them cheaper. But it could be that you have a lot of cats circling the same bowl," Reyes said.

Uber Eats' first-quarter revenue soared more than 50 percent to $819 million after restaurants across the US shuttered their dining rooms to curb the spread of the novel coronavirus.

The service, available in more than 6,000 cities worldwide, has been a drag on Uber's bottom line since its 2014 inception due to heavy spending on customer promotions and driver incentives.

Uber in January sold its Indian food business to local rival Zomato and earlier this month closed Eats operations in eight countries.

Grubhub recently said that the restaurant industry was facing enormous challenges from the COVID-19 pandemic, and it vowed to use nearly all of its second-quarter profits to help generate business for its restaurant partners.

The comments came amid growing concern from lawmakers and the restaurant industry about the negative influences of so-called "gig economy" companies.

Democratic US Representative David Cicilline, of Rhode Island, who chairs the House Antitrust Subcommittee, said that the deal underscores the need for the merger moratorium he and his colleagues have been calling for.

"Uber is a notoriously predatory company that has long denied its drivers a living wage. Its attempt to acquire Grubhub -- which has a history of exploiting local restaurants through deceptive tactics and extortionate fees -- marks a new low in pandemic profiteering," he said.

Andrew Rigie, executive director of the New York City Hospitality Alliance, said that Grubhub and other big delivery platforms continue to increase rates, control valuable customer data, and use sophisticated techniques and discounts to funnel customers to their own websites instead of those of their partner restaurants.

"Further consolidation of the industry poses significant concerns," Rigie said.

Antitrust experts said the deal, if signed, would likely win approval from regulators.

"I think this deal is doable. It does not seem to me to be an excess of concentration," said Seth Bloom of Bloom Strategic Counsel. "Probably the restaurants will not like it and will express concern, but I don't think that will carry the day."

Other experts told Reuters they expected a lengthy review.