Canaccord ups Just Eat to 'buy' following Takeaway.com agreement

Analysts at Canaccord Genuity upgraded Just Eat to 'buy' on Monday following an announcement that the group and Takeaway.com had reached an agreement in principle for an all-share merger.

Canaccord said the geographic profile of the new company was "complementary" and noted that the issue of a lack of a chief executive at Just Eat had been solved with the addition of Jitse Groen, the founder and CEO of Takeaway.com, who was now set to head up the combined group.

"As Just Eat is trading at a 15% discount to our target price of 750p, we upgrade our recommendation to 'buy' from 'hold'," said the analysts.

The Canadian broker felt the two business "fit well geographically" and that their combination would create "a European powerhouse", with Just Eat already the leading online food delivery market place in the UK and Canada, with a presence in Australia and New Zealand and small positions in Denmark, France, Ireland, Italy, Norway, Spain and Switzerland.

Post-merger, Canaccord expects the new group to exit Australia and New Zealand and sell its 33% stake in Brazilian venture iFood in order to focus on Europe and its fast-growing market in Canada.