Takeaway.com moves to take out Just Eat, analysts say counterbid possible
Just Eat and Takeway.com have reached a preliminary agreement on the key terms for merging the two online food delivery giants.
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There was no guarantee that a transaction would take place, with the two sides still working to hammer out the remaining details, after which their respective boards and shareholders would need to approve any combination, with both companies reserving the right to walk away.
The deal valued Just Eat shares at 731.0p each, for a 15% premium versus the previous session's closing price, but as of 0811 BST the stock had already run up by 20.61% to 766.60p, after analysts at Cannacord Genuity pointed out the possibility that a counterbid might surface.
Commenting on the news, Cannacord's Nigel Parson said the two businesses had a good geographic fit and that a successful tie-up would result in a European powerhouse.
He also reminded clients of recent activity in the same space, including Takeaway.com's purchase of Delivery Hero's German operations for €930m last December, the Amazon-led $575m funding round for Deliveroo in May and Just Eat's own acquisition of HungryHouse for £240.0m in January 2018.
"It is a possibility that Delivery Hero could table a rival bid," Parson said.
He also noted how Just Eat had been minus a chief executive officer since January, when Peter Plumb was sacked.
In a statement, Just Eat said the transaction would create the biggest online food delivery outfit in the world, touting the 360.0m in orders that the two companies had received in 2018, which were worth €7.3bn.
It also highlighted the combined management team's 40 years of experience in the sector and the fact that it was led by its founders.
Among other considerations, a combination would offer an improved ability to deploy capital and strengthen its competitive position, as well as the potential to increase operating leverage on investments - especially on technology and marketing.
Under the terms of the proposed transaction, shareholders of Just Eat would be entitled to 0.09744 shares in Takeaway.com for each of those in Just Eat, giving them roughly 52.2% of the combined company.
Takeway.com now had until 1700 BST on 24 August to announce a final decision to proceed, which could be extended.
Just Eat chairman Mike Evans would chair the new company's supervisory committee with Takeaway.com's Adriaan Nuhn assuming the post of vice chairman.
Takeaway.com's Jitse Groen meanwhile would become the new chief executive officer, with current Just Eat CEO, Paul Harrison, taking the post of chief financial officer.
Current Takeaway.com CFO, Brent Wissink, and Jörg Gerbig, the chief operating officer of Takeaway.com, would assume the role of Co-COOs of the combined group.
Takeaway.com would retain its two-tier board structure, with Just Eat able to nominate three members, aside from the new chairman and CEO and Takeaway.com another two.
The management board meanwhile would be comprised of Takeway.com's Jitse Groen, Brent Wissink and Jörg Gerbig, alongside Paul Harrison.
Following the proposed merger, Takeaway.com would be domiciled and headquartered in Amsterdam, but retain its premium listing on the London Stock Exchange, and a major part of its operations would be kept in the UK.
Parson also upgraded their recommendation on shares of Just Eat from 'hold' to 'buy' but kept his previous target price of 750.0p unchanged.
He also pointed out how the company's share price had retreated by 25% over the preceding 12 months, although as of the previous Friday's close the shares were changing hands on a price-to-earnings multiple of 82.0 times its estimated earnings for 2019 and at an enterprise value-to-earnings before interest, taxes, depreciation and amortisation of 21.6 times or a 2020 P/E of 72.5 and EV/EBITDA multiple of 19.1.
Both Just Eat and Takeway.com were scheduled to report second quarter earnings tow days later, on 31 July.