|10 December, 2019

Just Eat offer is taster for Christmas food fight

The Amsterdam-listed group on Monday sweetened its all-cash offer to 740 pence per share, valuing Just Eat at 5.1 billion pounds.

The app for Just Eat is displayed on a smartphone in this posed picture in London, Britain, August 5, 2019.

The app for Just Eat is displayed on a smartphone in this posed picture in London, Britain, August 5, 2019.

Reuters/Toby Melville

LONDON - Just Eat shareholders are limbering up for a feast this Christmas as two suitors prepare rival menus to win over the UK food delivery company.

In one corner of the kitchen is tech giant Prosus. The Amsterdam-listed group on Monday sweetened its all-cash offer to 740 pence per share, valuing Just Eat at 5.1 billion pounds. The new offer is just 4.2% better than its opening bid in October. But it still has the advantage of being higher than an all-share proposal from Takeaway.com. Based on the Dutch group’s share price on Monday morning, its bid is currently worth 691 pence per Just Eat share.

The two competing chefs have contrasting styles. Prosus boss Bob van Dijk warns that Just Eat faces slowing growth in the United Kingdom – which brings in half the company’s revenue – and pressure from rivals Deliveroo and Uber Eats. Retooling the business will be expensive and is best done away from the scrutiny of public markets.

By contrast, Takeaway.com Chief Executive Jitse Groen talks of giving shareholders a stake in a larger group. Just Eat’s board has so far sided with him, recommending that shareholders accept the Takeaway.com offer as it would create the largest food delivery firm outside China.

The latest serving is unlikely to be the final helping. Just Eat shares were trading at 780 pence on Monday, well above Prosus’s raised offer. That suggests investors are expecting the food fight to continue. Cat Rock Capital, which owns about 3% of Just Eat, said that Prosus’s new offer continues to “dramatically undervalue” the company. The final course looks set to be served around Christmas, as the current deadline for both bidders to submit their final offers is set to be Dec. 27.

That means Takeaway.com probably needs to cook up a new offer. The Dutch group is already proposing to hand over more than half the company to Just Eat shareholders. Further improving those terms would risk knocking its own share price, undermining the benefits of the move. An alternative would be to find an outside investor to help it garnish the bid with some cash.

With just over two weeks to go, the pressure is on both bidders to come up with a more compelling Christmas gift.

CONTEXT NEWS

- Tech giant Prosus on Dec. 9 raised its unsolicited cash offer for Just Eat to 740 pence per share from 710 pence, valuing the British food delivery company at 5.05 billion pounds ($6.5 billion).

- Just Eat has recommended a rival all-share offer from Dutch food delivery company Takeaway.com.

- Just Eat shares rose 0.6% to 781 pence by 0945 GMT on Dec. 9. Takeaway.com shares fell 2.4% to 84.4 euros. At that price, the Dutch company’s bid values each Just Eat share at 691 pence.

- Prosus shares were broadly unchanged at 60 euros.

(Editing by Peter Thal Larsen and Oliver Taslic)

© Reuters News 2019

More From Equities