A rival approach for takeaways firm Just Eat (JE.) may have torpedoed an unpopular merger with Dutch rival Takeaway.com and there could now be a bidding war for the business.

Prosus, the recently Dutch-listed arm of South Africa’s internet group Naspers has offered to buy Just Eat for 710p in an all-cash offer, and says its approach is friendly, rather than hostile.

At the time of the proposed merger with Takeaway.com we argued shareholders should hold out for a better deal, not least because the deal valued Just Eat at roughly half the multiple that Takeaway.com paid for Delivery Hero’s German business a year earlier.

SEVERAL OFFERS REJECTED

The board of Just Eat promptly rejected the Prosus proposal saying the offer ‘significantly undervalues Just Eat and its attractive assets and prospects both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com’.

This is not the first time Prosus has approached Just Eat’s board, with previous offers being pitched at 670p, 700p and, now, 710p per share all being rejected.

Whether shareholders swallow the board’s logic is a different matter as an all-cash ‘bird-in-the-hand’ offer pitched close to the same price may well be considered a better option than one paid in shares, the so called ‘bird in the bush’ option.

At the time of going to press Just Eat’s shares were trading at a premium to both offers, suggesting that the market is expecting a higher offer from Takeaway.com in order to seal its own deal. In addition, other suitors may be watching closely.

SEVERAL SUITORS IN THE WINGS

In May 2019 the UK competition regulator put the brakes on Amazon’s investment in Deliveroo while it launched a full investigation into the UK market. The companies have to act separately while they await the results of the first phase of its investigation.

The investment was Amazon’s attempt to re-enter the takeaway delivery market following the shuttering of its own business Amazon Restaurants.

This opened up speculation that Amazon will look to take a minority stake in Just Eat or even make a full offer. Analysts at broker Liberum think that the regulator would let through an Amazon deal with Just Eat more easily. This is predicated on Amazon making its intentions clear and promising to keep Just Eat as a standalone business.

It should be noted that Prosus is not new to the food delivery space and has global ambitions, having already invested in the sector through iFood in Latin America and Swiggy in India. It has deep pockets and the appetite to invest, so investors should take its offer seriously.

Shares in food delivery company Just Eat (JE.) had fallen back 18% from the implied 731p offer from Takeaway.com announced in July 2019 to just 598p on 21 October after a disappointing three-month trading update.

‹ Previous2019-10-24Next ›