Shareholders in Just Eat, Britain’s answer to
can leave room for a second helping.
On Monday, the takeout website gave details of a possible $6 billion bid from Dutch peer
having first disclosed talks on Saturday following a Sky News report. Under U.K. takeover rules, Takeaway.com now has just over three weeks to decide whether or not to make a firm offer.
Just Eat investors will find the prospect of having Takeaway.com’s well-respected Chief Executive Jitse Groen at the helm tempting. The British company has been without a permanent leader since the start of the year and has been criticized for subpar performance by activist investor Cat Rock, which owns 2.5% of Just Eat’s share capital as well as 4% of Takeaway.com’s. Since going public in 2014, Just Eat’s shares have delivered average annual returns of 21%, according to FactSet data—half what Takeaway.com has managed during its time as a listed company.
Less palatable, however, is a proposed 15% premium to Just Eat’s closing share price last Friday. Granted, the offer is in stock, and Just Eat shareholders would end up with a 52% stake in the combined business. But the modest takeover premium that is acceptable in an all-stock merger will look less attractive if someone else is willing to pay for control. Just Eat’s shares now trade 10% above Takeaway.com’s proposed price, implying expectations of a better offer or counterbid.
The fact that Takeaway.com’s shares rose 4% on Monday suggests its investors could tolerate more generous deal terms. But there are limits to how much more the Dutch company can ladle on. The two businesses have little geographic overlap, with Switzerland being the only market where they compete head on. That removes antitrust hurdles, but also limits the cost savings that can be wrung from integrating the companies.
Given a whole menu of potential suitors, a counterbid isn’t unrealistic. Cash-rich tech giants are moving into the space. Uber is investing heavily in its own food-delivery service Uber Eats. Amazon recently led a $575 million funding round for London-based delivery startup Deliveroo, while South Africa’s
is sometimes seen as a potential buyer.
Given the scale of the global food-delivery fight, Just Eat investors are right to hope for a sweeter deal.
Write to Carol Ryan at email@example.com
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