Just Eat investors ordered a higher bid. Now they have a £4.9 billion offer

A bidding war for Just Eat broke out on Tuesday after South African e-commerce company Naspers launched a hostile £4.9 billion all-cash offer for the U.K. food delivery firm, gate-crashing an agreed deal with its Dutch rival Takeaway.com.

Prosus PRX, +0.35%, a global investment vehicle which is majority-owned by media and technology group Naspers, has offered Just Eat shareholders 710p a share in cash.

Just Eat JE, +25.79% swiftly rejected the offer, claiming it undervalued the business both as a stand-alone company and as part of a merged group with Takeaway.

Takeaway’s TKWY, +2.68% original all-stock offer valued Just Eat’s shares at 731p, a premium of 15% to its closing price on July 26 — the day before the deal was announced. However, since then shares in Just Eat have fallen. At close of trading on Monday, Takeaway’s offer valued Just Eat at around 594p a share.

Shares in Just Eat shares soared 23% on Tuesday morning in London at 726p, above the price of the Prosus offer. Takeaway was up 2.8% at €72.95 ($79.97).

Bob van Dijk, Prosus chief executive, said the bid provides Just Eat shareholders the certainty of an all-cash offer. He said the group had taken its offer directly to shareholders after failing to reach an agreement with Just Eat’s board. But he added he wanted to support the Just Eat management team, which Prosus has worked closely with as joint investors in iFood.

“Prosus believes that the business will require substantial investment, in excess of that planned by Just Eat management,” van Dijk said.

Prosus’s offer comes just weeks after several shareholders voiced opposition to the Takeaway merger. In September, Eminence Capital, the New-York hedge fund which holds 4.4% of Just Eat stock and is the company’s second-biggest shareholder, said it would vote against the food delivery app’s planned £9bn merger with rival Takeaway, in the hope of a higher bid.

Eminence was the second investor to say the deal undervalues the UK-based online food marketplace. In July, fund manager Aberdeen Standard Investments, Just Eat’s sixth-biggest shareholder with a 5.1% stake, also said it wanted a higher offer. Eminence argues that while Just Eat will contribute the bulk of the merged group’s estimated revenues and gross profits in 2020, its investors will only own 52.2% of the new company.

Just Eat on Monday said its U.K. growth slowed in the third quarter, compared with 11% for the period before.

Prosus, which listed in Amsterdam in September, is a vehicle for Nasper’s stakes in e-commerce companies, including food delivery and payments. Its holding in Chinese tech group Tencent is currently valued at more than $110 billion. It has invested $2.8 billion in the food delivery sector across more than 40 markets since 2016.

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