Overnight reports that Uber is in talks to acquire Deliveroo made for interesting breakfast reading this morning. Finn Scott-Delany examines the likelihood of the deal coming off, and the potential impact on the UK delivery market.

Bloomberg’s report about Uber being in talks to acquire Deliveroo stress the negotiations are at their very early stages, as well the considerable obstacles that would need to be overcome - not least Deliveroo investors’ eagerness to remain independent.

Still, the fact the news of the talks has even been reported is a strong indicator the prospect is a serious one, according to Mark Brumby of Langton Capital.

“I would say by the time such news breaks, it is fairly likely to be at the stage where it will happen”, Brumby says.

With neither parties commenting on the story, details are sketchy, with any asking price expected to be several multiples of the c$2bn valuation.

But as far as the logic goes, Brumby sees it as a sound in principle: “You’re bringing more transport, the embryonic Uber Eats and financial firepower to the existing Deliveroo system.”

The perceived losers of such a deal, as widely seen in the market reaction today, would be Just Eat – and “maybe the restaurants”, Brumby adds.

Analysts at Peel Hunt agree that such a deal could put pressure on Just Eat and change the shape of delivery.

“Whilst this most certainly isn’t a done deal, given that Deliveroo hasn’t taken an IPO off the table, this would be a shift in the paradigm of the cooked food delivery market in the UK and beyond and could put enormous pressure on the poster child for takeaway aggregation, Just Eat.”

Peel Hunt said Just Eat’s buying power to get discounts for its restaurants, big data assets, and large swathe of customers remained formidable.

But the note added: “Uber - alongside others - has caused trouble for Just Eat in other markets, most notably Australia, where Just Eat has seen its operations slow and has had to implement a swift shift in model to delivery.”

According to Just Eat’s own research, the global market for takeaway delivery is worth more than £23bn annually, with the UK, its most developed territory, valued at around £6bn.

This market is forecast to grow to £11.2bn in spending by 2022, Takeaway Economic estimates.

Just Eat and Deliveroo/Just Eats have up until recently focussed on different parts of the takeaway market.

Just Eat built its business as a marketplace for traditional, usually independent takeaway-oriented businesses, while Deliveroo and later Uber Eats have focussed on providing delivery logistics for mid-market and premium restaurants.

Both groups have more recently signalled a shift into one another’s territory, with Deliveroo’s Marketplace+ opening up the platform to restaurants with their own delivery function, and Just Eat setting out a £50m delivery plan to investors earlier this month.

Uber Eats is further behind Deliveroo, having entered the UK market at a later stage - albeit from a strong technological and logistic starting position as part of the ride-hailing company.

The management of Eats UK have told MCA the business has no intention of following Deliveroo’s path towards ownership of restaurant assets, a la Editions, however it has been clear about its use of consumer data to help operators refine their proposition and develop virtual brands.

Uber’s US leadership has expressed a desire to expand the Eats business in Europe, and the acquisition of Deliveroo would clearly turbo-charge this ambition with the leading player in UK food delivery.

Just Eat has developed a FTSE-100 business valued at £5.6bn on just 14% market share, leaving plenty for to fight over.

“Uber wants this just for competitive reasons,” said Trish Caddy, foodservice analyst at Mintel.

“The purpose would be to create this simpler competitive landscape between Just Eat and UberEats.”

“It’s just going to be a two-horse race now,”