A New $6.2 Billion Takeover Bid Could Consolidate Europe’s Fierce Food Delivery Space

July 29, 2019, 10:50 AM UTC
Takeaway.com rider in Amsterdam
AMSTERDAM, THE NETHERLANDS - APRIL 13: Takeaway.com cyclist rides near Westerpark on April 13, 2019 in Amsterdam, The Netherlands. Takeaway.com, founded by its nowadays CEO Jitse Groen in 2000 under its Dutch name Thuisbezorgd.nl, is a Dutch dot-com company specialized in online food ordering and home delivery as an intermediary online portal between affiliated restaurants and customers who can order food online from their menus, to be delivered directly to them. At present it operates in 10 countries, and its CEO states is the market leader in the Netherlands and Belgium. (Photo by Horacio Villalobos - Corbis/Corbis via Getty Images)
Horacio Villalobos—Corbis via Getty Images

Takeaway.com NV made a 5 billion pound ($6.2 billion) bid for rival Just Eat Plc, continuing its consolidation push with a deal that would intensify competition with the likes of Uber Technologies Inc. in the food-delivery space.

The Dutch company is offering an implied value of 731 pence for each Just Eat share, 15% more than the target company’s stock price on July 26, the day before talks first became public. The new company intends to remain based in Amsterdam, with a premium listing on the London Stock Exchange. Just Eat shares rose as much as 26% to 799.4 pence in London, suggesting investors are betting that possible rival suitors might drive up the price of the asset.

The food delivery industry in Europe has become a battleground, with rivals competing on prices and copying each other’s business models. A deal would mark the second time Takeaway.com has entered the U.K. The company first launched in the country in 2012, but sold the business four years later to Just Eat, after struggling with growth.

“A combined entity can achieve over 10 billion pound market cap short term,” said Marcus Diebel, analyst at JP Morgan in a research note. “A new leadership will bring what Just Eat lacks, execution on tech and an acceleration in disposals.

Takeaway.com has been rapidly expanding following a surging share price. In December it agreed to buy rival Delivery Hero SE’s German operations for about $1 billion, ending an expensive rivalry in a country where both were competing for market share at the cost of profitability.

Joining forces with Takeaway.com would mark something of a bailout for Just Eat, which has stuttered in the face of pressure from rivals and an activist shareholder. Once the dominant player in the food delivery market in the U.K., its shares have fallen amid growing competition from Uber Eats and Deliveroo, and the company is without permanent CEO after the departure of Peter Plumb in January.

Takeaway.com’s implied 15% premium all-stock bid for U.K. food-delivery leader Just Eat is fair—but may be raised, in our view—and the lack of country overlap, bar Switzerland, limits regulator risk. The combined entity would dominate in Europe vs. Uber Eats and Deliveroo.
Diana Gomes, consumer goods analyst

The combined company would be one of the biggest in the sector. Their combined market value was about $11 billion before news of the talks broke on July 27. While both have a similar valuation, Just Eat shares had fallen 25% over the past 12 months while Takeaway.com’s shares had risen 46%.

Rather than sparking a bidding war, Takeaway.com might decide to sell on parts of the assets, Barclays analyst Andrew Ross said in a note to investors.

“It is perfectly possible that Uber gets involved down the line – it is possible that Takeaway.com could decide that markets like Australia and Canada are non-core within Just Eat and looks to sell those down the road,” Ross said in the note.

Just Eat shareholders would own approximately 52.2%. in the new combined company, while Takeaway.com shareholders would own approximately 47.8%.

Takeaway’s chief executive Jitse Groen—who has about a $1.4 billion fortune, according to the Bloomberg Billionaires Index—has been penciled in as the CEO of the combined company, while Mike Evans, currently the chairman of Just Eat, will assume the same role for the combined group, according to the statement.

Investor Cat Rock Capital Management LP has been lobbying for Just Eat to merge with a rival, arguing that consolidation would be the only way to deliver “real value.” Cat Rock holds a 4.9% stake in Takeaway, according to a filing with Dutch market regulator AFM. It’s stake in Just Eat stands at 2.6%, according to Bloomberg Data.

Goldman Sachs, Oakley Advisory and UBS advised Just Eat, while Bank of America Merrill Lynch and Lazard advised Takeaway.com.

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