Just Eat picks takeaway offer, Prosus looks set to lose out

Just Eat chose a revised offer by Takeaway.com to merge and spurned a final all-cash bid by Prosus, which appears all but set to lose the drawn-out fight to claim ownership of the British food-delivery firm.

The UK company on Friday said its board recommended Takeaway’s final offer because it would deliver greater value to Just Eat shareholders than Prosus’s final revised bid. Just Eat has also rejected Prosus’s previous bids.

Takeaway said on Thursday it increased its offer to 916 pence per share, with Just Eat holders to own 57.5% of the combined group. Just moments before, Amsterdam-listed Prosus increased its cash offer to 800 pence per share, valuing the company at about £5.5bn. Both companies said these were their final offers and they would not be increased.

“Just Eat continues to believe that the combination with Takeaway.com is based on a compelling strategic rationale that allows shareholders to participate in the upside potential of the enlarged group,” Just Eat said in a statement, adding that it recommended shareholders take no action on the Prosus offer.

So far, a collection of investors have also been vocal in their support of Takeaway’s bid. Cat Rock Capital Management, which owns shares in both Takeaway and Just Eat, said Takeaway’s offer is a “win-win for both companies,” and urged Just Eat shareholders to “join us in accepting this final Takeaway.com offer at the earliest possible opportunity.”

Aberdeen Standard Investments, a Just Eat shareholder, also said it welcomed Takeaway’s improved offer.

“The combined business will be a global leader in the strongly growing online food delivery market and we want to retain exposure to its exciting long-term potential, rather than taking a cash offer for Just Eat and walking away,” said Andrew Millington, head of UK equities at Aberdeen.

Shareholders have until January 10 to make up their mind. Takeaway said it has received acceptances and commitments of around 41.09% of Just Eat’s shares and reduced its acceptance condition for the deal to a majority of 50% plus one Just Eat share.

Next steps

Prosus has argued that it has the resources to make the significant investments in Just Eat necessary for it to stay competitive, while Takeaway believes that it actually knows how to run a food delivery startup, rather than just own one.

However, the two bids have been further complicated after shares of Takeaway on Thursday dropped as much as 10% after the final bids were announced, cutting the amount those backing the Takeaway deal would receive. Shares in Prosus rose just over 1%.

Hungry for more

“We have brought forward our best and final offer for Just Eat,” Takeaway Chief Executive Officer Jitse Groen said in a statement. “We believe it provides Just Eat shareholders with tremendous upside.”

“Takeaway.com’s improved all-stock merger terms for Just Eat - to be sweetened with 50% of the cash proceeds from its iFood stake sale - is more likely to be accepted by the 50% threshold of shareholders by January 10 (vs. 13.5% currently). The implied value of 916 pence a share tops Prosus’ raised cash offer.” - Diana Gomes, BI consumer analyst

Brazil’s iFood

Takeaway also said it would now explore the exit of Just Eat’s 33% stake in Brazil-based iFood, in which Prosus also invested, adding it would return around 50% of the net proceeds to shareholders of the combined group.

The companies are vying for Just Eat as competition heats up in the global food delivery market. Giants like Uber’s Uber Eats platform are going up against a proliferation of apps for a share of the fast-growing sector. Other players are consolidating, such as Germany’s Delivery Hero, which last week said it would take control of South Korea’s biggest food delivery app, Woowa Brothers, at a $4bn valuation.

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