Two months after it left the London Stock Exchange, food-delivery company Just Eat has been “snapped up” by Prosus for €4.1 billion in cash, says Jasper Jolly in the Guardian. The deal represents a 22% premium to its three-month high.
However, the stock is still worth less than a fifth of its peak above €100 in 2020. The fall in Just Eat’s share price over the past five years was due to “several missteps”, notably the “disastrous” acquisition of its US rival GrubHub. A few months ago, Just Eat revealed that it was selling GrubHub for $650 million, a fraction of the purchase price of $7.3 billion.
Just Eat’s “botched US expansion” isn’t the only reason for the fact that it is now being sold for a fraction of its peak value, says Matthew Field in the Telegraph. Another factor is that the “Covid-era boom” in ordering takeaways has faded. This has left Just Eat “battling for market share in the UK’s fiercely competitive food delivery market”. Its principal rivals are Deliveroo and Uber Eats. However, the decision by Prosus to buy it has sent other food-delivery stocks climbing across Europe on speculation of further mergers in the sector.
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Shares in Amsterdam-listed Prosus may have fallen by 7% after the news of the takeover, but talk of using the Just Eat expansion to create a “European tech champion” isn’t just empty spin, says Jessica Newman in the Times. Prosus already has a food business in 70 countries and holds big stakes in several European food delivery companies, making these plans credible. In addition to owning iFood, Latin America’s leading food-delivery platform, outright, Prosus also has a 28% stake in Just Eat’s German rival, Delivery Hero; a 25% share of India’s Swiggy; and 4% of Chinese shopping platform Meituan.
Prosus’s CEO said last month that he has “$20 billion worth of firepower to spend on deal”, says Aimee Donnellan on Breakingviews. This would be more than enough to buy out the remaining shares in Delivery Hero, or “lobby for a merger [of Delivery Hero] with Just Eat”. Such a strategy looks even more attractive as splicing together the pair along with iFoods could produce €470 million of annual synergies. While such a deal might “raise antitrust eyebrows”, given that Just Eat alone has a market share above 40% in 11 European countries, the EU “is looking more kindly” on local champions within the bloc.
Still, whether or not Prosus tries to consolidate the food-delivery industry further, its track record suggests it is in it “for the long term” and interested in finding ways to “grow revenue rather than just cut costs”, says Lex in the Financial Times. There is also hope that it can apply some of iFood’s “magic sauce” to Just Eat. Such “tech tweaks” could include “voice-activated ordering for customers, optimised routes for couriers and stronger profiling for merchants”. What’s more, “improving fraud detection and knowing when – and how – to dish out discounts to customers are also applicable across the portfolio”.
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