Uber Technologies Inc. (NYSE: UBER) is in talks to buy the food delivery company Grubhub Inc. (NYSE: GRUB), according to news reports. But whether the two companies will reach an agreement and whether it would survive the scrutiny of regulators are open questions.

The Wall Street Journal reported the talks on Tuesday afternoon, attributing the information to “people familiar with the matter.” Other news organizations, including Bloomberg News and the New York Times, published similar reports.

The stock prices for both Uber and Grubhub rose Tuesday afternoon, with Grubhub gaining more than 29%. It closed at $60.39, giving the Chicago-based company a market capitalization of $5.6 billion. Uber’s stock price rose 2.4%, closing at $32.40. Its market value is $56.2 billion.

No Confirmation From Uber or Grubhub

Uber, which has a food delivery unit called Uber Eats, and Grubhub declined to confirm the reports. But the Journal said in January that Grubhub was considering its strategic options, including a possible sale.

“We remain squarely focused on delivering shareholder value,” Grubhub said in a statement Tuesday after the reports surfaced. “As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.”

Uber’s statement said, “We are constantly looking at ways to provide more value to our customers, across all of the businesses we operate. We have shown ourselves to be disciplined with capital, and we do not respond to speculative M&A premiums.”

Uber, the ride-sharing company headquartered in San Francisco, approached Grubhub in February with an offer that was an all-stock deal, the Journal said. Since then, the two companies have been in talks.

Pandemic Puts Food Delivery in the Spotlight

Citing unidentified people familiar with the matter, the Journal said Grubhub had recently proposed that Uber pay 2.15 of its shares for each Grubhub share. That proposal was rejected. The companies are still talking, the Journal said, and Uber’s board may consider a deal in the coming days.

The food delivery business has gained new attention and new customers as people across the country have been in lockdown because of the coronavirus pandemic. There are four major U.S. players in the industry — Grubhub, Uber Eats, Postmates and DoorDash — and all of them lose money.

The industry is highly competitive, with companies offering discounts to gain and keep customers. During the COVID-19 crisis they have also waived fees for restaurants that are struggling to stay afloat with only takeout and delivery orders permitted.

If Uber is successful in taking over Grubhub, Uber would control more than 50% of the food delivery business in the country, the Associated Press said. DoorDash, which has filed for an initial public offering, would be its biggest competitor, with about 35% of the business, the New York Times said.

Resistance From Congressman

Even if Uber and Grubhub reach an agreement — which is no certainty — they face regulatory hurdles. U.S. Rep. David Cicilline, a Democrat from Rhode Island who heads the House Judiciary antitrust subcommittee, has already said there should be a freeze on mergers and acquisitions during the pandemic.

In a statement about the Uber-Grubhub talks, he said, “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.”

Cicilline added, “We cannot allow these corporations to monopolize food delivery, especially amid a crisis that is rendering American families and local restaurants more dependent than ever on these very services.”

Last week, Uber reported that its meal-delivery business grew by 53% to $819 million in the first quarter. It had a $313 million adjusted loss for Uber Eats.

In the first quarter, Grubhub’s revenue rose 12% to $363 million. But it saw a net loss of $33.4 million.

A deal with Grubhub would come at a critical time for Uber. The pandemic has gutted the ride-hailing business as adults work from home and their children study from home. And in the time of “social distancing,” customers may be reluctant to ride in the car of a person who has been summoned by a phone app.

In trading Wednesday, Uber and Grubhub had declined slightly at midday. Uber was down about 3% while Grubhub was down about 5%.

Over the last 52 weeks, Uber’s share price has ranged from $13.71 to $47.08. Grubhub’s 52-week high is $80.25, reached last June. Its 52-week low is $29.35.

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