Prosus raises offer for Just Eat app as takeover bids intensify

Prosus has raised its bid for UK food delivery firm Just Eat as it tries to win over investors and beat out an offer from rival Takeaway.com.

The technology investment company, spun out of Naspers [JSE:NPN], increased its cash offer by 4.2% to 740 pence (R142.66) per share, valuing Just Eat at about £5.1bn (R98.3bn), Prosus said in a statement on Monday.

Just Eat’s management has been encouraging investors to vote for Takeaway’s all-share deal, which would give them scale and access to Takeaway’s technology, arguing that Prosus’s offer undervalued the company even as a slide in Takeaway’s share price pushed down the value of its all-stock offer. As of Friday, after a month-long rally, Takeaway’s bid valued Just Eat shares at 710 pence each.

Shareholders have until December 27 to accept Prosus’s new offer. Prosus needs investors with more than 50% of shares to agree to the deal for it to go through.

Spokespersons for Takeaway and Just Eat didn’t have immediate comments.

Bidding

Investors have been holding out for more. Just Eat’s shares have been trading above both offers. The stock rose 6.8 pence to 783.8 pence (R151.11) at 9:05 in London on Monday. Takeaway shares fell 1.3% and Prosus declined 0.2% in Amsterdam.

Aberdeen Standard Investments, which holds about 5% of Just Eat, said previously that Prosus needs to increase its offer by 20%. The investor also wanted Takeaway to increase its bid. Eminence Capital, which holds about 4%, in September said Takeaway’s bid undervalued Just Eat and that it planned to vote against that deal.

Cat Rock Capital Management, which owns shares in both Takeaway and Just Eat, has been lobbying Just Eat holders to take the Takeaway deal and has said that the combination would create a company worth 1 200 pence per share (R231.35) by the end of next year.

Prosus has size on its side. The $108bn market cap technology investment vehicle was spun out of South Africa’s Naspers in September. It has $5.4bn in cash to help fund the offer and “sufficient financial resources to cover for its bid beyond current terms,” analysts at Jefferies Financial Group said in a note in clients. Still, the relatively modest raise, about 4.2% higher than its previous offer, indicates Prosus is being “careful not to overpay.”

Prosus owns stakes in similar companies globally, including a 22% stake in German delivery company Delivery Hero, about 39% of India’s Swiggy and 55% of Brazil’s iFood.The firm announced its hostile bid in October for Just Eat, challenging the offer from Takeaway that was due to go through by the end of the year. The deal would be much more transformational for Takeaway, which has a market value of about $5.8bn. Under that offer’s terms, Just Eat shareholders would own about 52% of the combined company.

Takeaway has so far pushed back against increasing its bid for Just Eat. “I don’t want to be the idiot that runs into a ratio that doesn’t make any sense,” Jitse Groen, Takeaway’s CEO and founder said in November.

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