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GrubHub Seamless – Hungry for an IPO, But Not Famished

Report indicates that the company could come public sometime next year.


The success of the Twitter (TWTR) IPO last week — as well as the bull move in stocks like Facebook (FB) and LinkedIn (LNKD) — has Wall Street prepping other high-profile dot-coms for pubic offerings. And one of the most interesting prospects appears to be GrubHub Seamless.

GrubHub Seamless is the merged entity of GrubHub and rival Seamless — a pair of online restaurant delivery services — that closed in early August. Combined, the company has operations in more than 40 cities in the U.S. and has a network of more than 10,000 restaurants.

And according to a report in TheDeal, discussions have been held about an IPO, an offering for this new tech combo might come sometime in 2014 or early 2015.

The origins of GrubHub Seamless actually go back to 1999, when Seamless was founded. The goal has always been on building a highly automated and secure system for restaurant takeout and delivery. As one would expect, they’ve expanded to mobile, offering an app for Apple (AAPL) and Android-powered devices.

For the most part, the company has found lots of opportunity targeting business customers, who no doubt utilize the convenience of quicker-form lunches.

Growth has been robust, with the ramp coming at about 40% per year. The Deal also reports that the combined entity should exceed $200 million in revenues for 2013.

GrubHub Seamless does have a little competition, as Yelp (YELP) has recently introduced a similar service. And one could expect (AMZN) will eventually be another big factor.

But GrubHub Seamless also could have some legal issues. Keep in mind that the company has exclusivity agreements with various restaurants in New York City. While the company agreed with Attorney General Eric Schneiderman to suspend their agreements for 18 months, the New York Business Journal points out that further action could be taken upon Schneiderman’s re-evaluation.

Given such issues — and the prudence in waiting a few quarters to make sure the merged operations are running smoothly — there’s no reason for GrubHub Seamless to rush an IPO.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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