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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Saver with just £100 in Premium Bonds wins £1 millionNS&I has announced the winners of March’s Premium Bonds prize draw. Who won the £1 million jackpot and how can you find out if you scooped a prize?
-
8 of the best listed properties for saleThe best listed properties for sale now – from a renovated 18th-century castle in Devon, to a Grade I-listed double-fronted John Nash villa in London
-
Should investors stay bullish and buy UK and US stocks?Opinion Ignore the Eeyores, says Max King. The outlook for stocks in both Britain and America remains auspicious
-
Drone company Red Cat Holdings sees shares tumbleRed Cat, the unprofitable and inefficient US drone manufacturer is set to slide
-
Investors should rise with the dawn of the African centuryAfrica has a troubled history and recent years have been difficult. But conditions are ripe for a turnaround in its fortunes – investors should get in early
-
Majedie sees an impressive turnaround under MaryleboneMajedie Investments, a once-ailing trust has seen its discount shrink to almost nothing under its new manager, Marylebone Partners
-
Filtronic: A British stock reaching for the starsOpinion British stock Filtronic’s explosive growth is only just getting started
-
Should you collect fine cognac?Collectables The French spirit cognac is going from strength to strength, says Chris Carter
-
Gold’s surprisingly stealthy bull marketGold's multi-year gains gathered less attention than you’d expect, but that now seems to be changing, says Cris Sholto Heaton
-
No need to run from the robots: Nobel laureate Daron Acemoglu talks to MoneyWeekInterview Daron Acemoglu, Nobel Prize winner and professor at MIT tells Matthew Partridge why the gains from AI have been overhyped
