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Prosus, Takeaway trade barbs in battle for Britain's Just Eat

Stock Markets Nov 20, 2019 10:29AM ET
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© Reuters. FILE PHOTO: The app for Just Eat is displayed on a smartphone, in London
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By Toby Sterling

AMSTERDAM (Reuters) - The two companies vying to purchase British food delivery service Just Eat traded barbs on Wednesday, as technology company Prosus and each sought to win over a critical mass of shareholders.

Prosus said's all-share bid, which runs from Wednesday through Dec. 11 and is recommended by the Just Eat board, presents "significant risks" and underestimates how competitive the British market is.

The broadsides came after a two-week period in which Takeaway's share price has rallied to a point where its offer nearly matches Prosus's 4.9 billion pound ($6.3 billion) cash bid, erasing the advantage Prosus hoped to gain when it first launched its unsolicited bid in October.

Takeaway's offer, which would see its founder Jitse Groen become CEO of the combined group, valued Just Eat at 698 pence or 4.76 billion pounds ($6.14 billion) as of the close of trade on Tuesday, according to Reuters calculations.

Just Eat shares traded at 753.4 pence at 1422GMT on Wednesday, signalling that shareholders believe a higher bid by one or the other side is likely. Prosus's offer also ends Dec. 11 and both are conditional on receiving 75% of shares.

Prosus, which is controlled by South African investment giant Naspers Ltd., said in a statement that Takeaway's offer "takes a narrow view of the food delivery sector based principally on its experience in the Netherlands and Germany."

These markets "have so far been relatively insulated" from competition of the likes of Uber (NYSE:UBER) Eats and Deliveroo, it added.

In a response, Takeaway said it had become the biggest in seven of its markets "fighting the same competitors Just Eat faces in the UK".

Takeaway has played on its experience in the sector and argues its bid will create a global powerhouse in food ordering, and save the combined group 20 million euros in costs over time.

"Being an operator is clearly different from being a financial investor," it said in an emailed statement.

Just Eat's board has recommended shareholders reject the Prosus bid saying it "significantly undervalues" the company.

Prosus, which owns stakes in food-ordering companies around the globe, said on Wednesday it doubted Takeaway can roll-out its own delivery service in Britain with no impact on the bottom line and with only tens of millions of investment.

In a Nov. 12 statement, Takeaway forecast costs "in the tens of millions", to reposition the combined group for long term growth, including by strengthening its delivery service in Britain.

Groen's strategy in the Netherlands and Germany has centred on becoming the dominant platform for food ordering, with food delivery seen as a supplementary business with worse economics.

Takeaway shares have rallied 17% from a recent low on Nov. 5.

Prosus, Takeaway trade barbs in battle for Britain's Just Eat

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