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Term Sheet — Thursday, Feb. 5

February 5, 2015, 2:55 PM UTC
Fortune

Random Ramblings

GrubHub is a $3 billion public company known for helping to connect hungry users with restaurants that will deliver them food. Now GrubHub wants to deliver the meals itself, in a major preemptive move against on-demand delivery aspirants like Google and Amazon.

The Chicago-based company already had been testing its own service in three markets — San Francisco, Los Angeles and Chicago — but this morning announced that it has acquired DiningIn (based in Brighton, Mass.) and signed an agreement to acquire Restaurants on the Run (Aliso Viejo, Calif.). The two deals are said to be worth approximately $80 million, and mean that GrubHub will be executing deliveries for nearly 3,000 restaurants in around one dozen U.S. metro markets.

The real key to all of this may be price.

GrubHub is a business that still values volume over premium pricing, and plans to eventually offer its own delivery service to restaurants without increasing the 14% margin it currently charges for its backend infrastructure. Not only is this significantly lower than the 20-30% that many restaurants are charged by current delivery groups (including DiningIn and Restaurants on the Run), but GrubHub only plans to charge customers whatever nominal fee is needed to make the delivery break-even (or nothing at all, depending on if it can offset that difference with increased deliveries).

“There is economy of scale in the volume of deliveries,” explains Bill Gurley, a venture capitalist and GrubHub board member. “The more volume you have, the more economical you can be.”

The pricing also would be designed to put pressure on rivals like Square, which last year paid a reported $90 million to acquire on-demand restaurant delivery startup Caviar. Not to mention on Google and Amazon, which seem interested on entering every single type of on-demand delivery space.

In short, GrubHub wants to corner the restaurant delivery business (thus perhaps making it a very attractive acquisition target in its own right). The company already offers infrastructure products that live inside the restaurant (OrderHub) and for delivery drivers (DeliveryHub), and believes that using its own drivers will make the automation easier, and make the customer experience better.

“I have a very strong belief that these verticals are more complex than people realize,” Gurley says. “Remember when LivingSocial jumped into GrubHub’s business? You could point the same finger at Square. It looks easy from the outside, but you get inside and realize that you have to keep all of these menus up to date and handle compliance and customer service and all other sorts of detailed work. Yes, the bigger companies may make moves here, but I’d rather be in the leading spot — with a business built around large order flow — than anywhere else.”

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THE BIG DEAL

 Pfizer Inc. (NYSE: PFE) has agreed to acquire Hospira Inc. (NYSE:HSP), a provider of injectable drugs and infusion technologies, for approximately $17 billion. Read more.

VENTURE CAPITAL DEALS

 Zoom, a Santa Clara, Calif.-based cloud video conferencing company, has raised $30 million in Series C funding. Emergence Capital led the round, and was joined by return backers Horizon Ventures, AME Cloud Ventures, Qualcomm Ventures and Dr. Patrick Soon-Shiong. www.zoom.us

 Tracx, a New York-based provider of social enterprise platforms for Fortune 1000 companies, has raised $18 million in growth equity funding. Edison Partners led the round, and was joined by return backers Flybridge Capital, Mousse Partners, Klingenstein, and Fields & Co. The company previously raised $10 million. www.tracx.com

 SteelBrick, a San Mateo, Calif.-based provider of configure, price, quote applications, has raised $18 million in Series B funding. Shasta Ventures led the round, and was joined by Salesforce Ventures and return backer Emergence Capital. www.steelbrick.com

 Sauce Labs, a San Francisco-based provider of mobile and web app functional and unit testing infrastructure solutions, has raised $15 million in Series D funding from existing investor Toba Capital. www.saucelabs.com

 ClusterHQ, a UK-based provider of Docker container data and volume management solutions, has raised $12 million in new VC funding. Accel Partners led the round, and was joined by return backer Canaan Partners. Read more.

 HouryNerd, a Boston-based online marketplace for freelance business talent, has raised $7.8 million in Series B funding. Existing shareholder Highland Capital Partners led the round, and was joined by GE Ventures, Greylock Partners, Suffolk Equity Partners and individual angels. www.hourlynerd.com

 Velano Vascular, a medical tech startup aimed at reducing needle sticks during the inpatient blood draw procedure, has raised $5 million in Series A funding. Backers include First Round Capital, White Owl Capital, Kapor Capital, Safeguard Scientifics and two unidentified hospitals. The company has offices in Philadelphia and San Francisco. www.velanovascular.com

 Dering Hall, a New York-based online portal for high-end home furnishings, has raised $2.5 million in Series A funding. Backers include Hearst Magazines, Lerer Hippeau Ventures and SoftBank Capital. www.deringhall.com

 Graylog Inc., a Houston, Texas–based open-source log analysis platform, has raised $2.5 million in new VC funding. Mercury Fund led the round, and was joined by Crosslink Capital, Draper Associates and High-Tech Gründerfonds. www.graylog.com

 GPredictive, a Germany-based startup that analyzes customer data for enterprises and predicts future behavior, has raised €2.5 million in Series A funding from Target Partners. www.gpredictive.de

 Vocabulary.com, a learning platform in the K-12 and consumer space, has raised an undisclosed amount of strategic funding from Follett Corp. www.vocabulary.com

PRIVATE EQUITY DEALS

 Apollo Global Management is the frontrunner to buy Lawrence, Kansas–based home security company Protection 1 in a deal that could be worth nearly $1.5 billion (including debt), according to Reuters. Rival suitors have included Ares Management and ADT Corp. (NYSE: ADT). Read more.

 Insight Venture Partners has agreed to acquire E2open Inc. (Nasdaq: EOPN), a Foster City, Calif.–based provider of cloud solutions for collaborative planning and execution across global trading networks, for approximately $273 million in cash. The $8.60 per share deal represents a 41% premium to yesterday’s closing price. www.e2open.com

 Mosaic Capital Partners has sponsored the ESOP buyout of ETAK Systems LLC, a Charlotte, N.C.-based provider of outsourced services to wireless carriers for scheduled maintenance and installation activities. No financial terms were disclosed. Sellers included Azalea Capital. www.etaksystems.com

 SMG Holdings, a West Conshohocken, Penn.–based provider of entertainment and conference venue management services, has acquired CGC Events Ltd., a catering concessionaire servicing venues in Northern England. No financial terms were disclosed. SMG is a portfolio company of American Capital Ltd. www.smgworld.com

 Trinity Hunt Partners has acquired Deposition Solutions, a provider of deposition and litigation support services for law firms and corporate legal departments in Texas. No financial terms were disclosed, except that Cadence Bank provided senior debt financing. www.trinityhunt.com

IPOs

 Hanson Building Products, a UK-based provider of concrete and clay building products, has withdrawn registration for a $100 million IPO. The move comes several months after Hanson owner Heidelberg Cement agreed to sell the company to Loan Star Funds for around $1.4 billion. www.hansonbuildingproducts.com

 Press Ganey, a South Bend, Ind.-based healthcare research firm owned by Vestar Capital Partners, has hired Barclays and Goldman Sachs to help manage an IPO that could value the company north of $1 billion, according to Reuters. Read more.

EXITS

 Centre Partners has sold Distant Lands Trading Co., a Renton, Wash.-based branded and private-label coffee company, for $160 million to the North American subsidiary of Japanese beverage company Ito En Ltd. (Tokyo: 2593). www.dlcoffee.com

 The Medicines Co. (Nasdaq: MDCO) has acquired Annovation Biopharma, a Cambridge, Mass.-based developer of therapies for anesthesia and critical care. No financial terms were disclosed. Annovation had raised around $8 million in VC funding from The Medicines Co., Atlas Venture and Partners Innovation Fund. www.themedicinescompany.com

 Microsoft (Nasdaq: MSFT) has agreed to acquire calendar app maker Sunrise. No financial terms were disclosed, although various press reports put the price-tag around $100 million. Sunrise had raised around $8 million in VC funding from firms like Balderton Capital. Read more.

 Roper Industries Inc. (NYSE: ROP) has agreed to acquire SoftWriters Holdings Inc., an Allison Park, Penn.–based provider of pharmacy management software, from TA Associates, according to an FTC filing. No financial terms were disclosed. www.softwriters.com

 Under Armour (NYSE: UA) has acquired MyFitnessPal, a San Francisco-based service for letting users track and share calorie intake and other health and wellness data, for $475 million. MyFitnessPal was founded in 2005, but last year raised $18 million in its first round of outside funding from Kleiner Perkins Caufield & Byers and Accel Partners. Read more.

 Under Armour (NYSE: UA) has acquired Endomondo, a Denmark–based social fitness network, for around $85 million. Endomondo had raised VC funding from Seed Capital Partners. www.endomondo.com

 Wabtec Corp. (NYSE: WAB) has acquired Railroad Controls LP, a Benbrook, Texas-based provider of railway signal construction services, from Hawthorne Equity Partners. No financial terms were disclosed, except that Railroad Controls generated around $75 million in 2014 revenue. www.railroadcontrols.com

OTHER DEALS

 BT has agreed to buy British mobile operator EE for approximately $19 billion. Read more.

 Marathon Patent Group Inc. (Nasdaq: MARA) has entered into a $50 million long-term financing facility with funds managed by Fortress Investment Group. www.marathonpg.com

 Mike's Hard Lemonade Co., a Chicago-based maker of malt beverage brands, is seeking a buyer that could value the company north of $1 billion, according to Reuters. Read more.

FIRMS & FUNDS

 Bolt, a Boston-based VC firm and incubator focused on connected hardware startups, has closed its second fund with $25 million in capital commitments. The firm also announced that it is opening a facility in San Francisco. LPs include Autodesk, Logitech, Grishin Robotics and Cisco Investments. www.bolt.io

 Crosslink Capital, a San Francisco-based VC firm, has closed its seventh fund with $170 million in capital commitments. www.crosslinkcapital.com

 EIV Capital, a Houston-based private equity firm focused on the energy sector, has closed its second fund with $267 million in capital commitments. Champlain Advisors served as placement agent. www.eivcapital.com

 Housatonic Partners, a San Francisco-based private equity firm focused on the middle markets, is raising upwards of $400 million for its sixth fund, according to a regulatory filing. It had raised $350 million for its fifth fund. www.housatonicpartners.com

MOVING IN, UP, ON & OUT

 Jack Ferry has joined Columbia Pacific Advisors as chief financial officer. He previously led financial and administrative functions for VC firm Ignition Partners. www.columbiapacific.com

 Theresa Mozzocci has joined Manaron Capital as a principal. She previously was a managing director of marketing and sales with Cantor Fitzgerald. In other Manaron Capital news, the firm has promoted Andrew Eshelman to vice president. www.manaroncapital.com

 Paul Mouchakkaa has agreed to join the California Public Employees’ Retirement System (CalPERS) as senior investment officer of real assets, effective March 2. He currently serves as a managing director with Morgan Stanley Real Estate Investing. www.calpers.com

 Rene Obermann has joined Warburg Pincus as a London-based managing director and partner, with a focus on the TMT sector. He previously was CEO of Ziggo NV, until its acquisition by Liberty Global. www.warburgpincus.com

 Kevin Warn-Schindel has joined HarbourVest Partners as a Boston-based managing director and head of the firm’s real assets investment program. He previously spent 10 years as a managing director and group head of OPTrust Private Markets Group, a unit of Toronto-based defined benefit pension plan OPTrust. www.harbourvest.com

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