Takeaway still undervalues Just Eat, says Prosus
Naspers’s newly listed internet arm is in a bidding war for UK-based online food delivery group
Naspers’s Netherlands-based subsidiary Prosus dialed up its appeal for Just Eat shareholders to reject a rival bid from Takeaway.com on Wednesday, as a December 11 deadline for its own offer looms.
Prosus, which owns a range of internet-based businesses, says Takeaway continues to underestimate the value of the online delivery platform, saying shareholders should consider the future of the company in an increasingly competitive and hostile operating environment. Without substantial further investment, Just Eat will continue to underperform, the company said.
The targeting of Just Eat forms part of CEO Bob van Dijk’s strategy of building Prosus around three pillars: online payments; food delivery; and online classifieds.
The company wants to leverage its experience in delivery, having investments in iFood in Latin America, Delivery Hero from Germany, and Indian business Swiggy. This would help it compete with Uber Eats and Amazon-backed Deliveroo.
On Wednesday, Takeway declared the offer period for its all-share bid open, though the financial terms of the document remain unchanged from August.
According to Reuters, the Takeaway offer values Just Eat at 698p or £4.76bn (about R90bn). The offer also runs until December 11 and will be declared unconditional on January 31 if 75% of Just Eat shareholders tender their shares.
Prosus offered 710p per share in cash for Just Eat.
Byron Lotter, a portfolio manager at Vestact Asset Management, said Prosus seems “to make a better fit. It definitely makes sense to go in that direction”.
He said that as Prosus has the fintech capabilities; has likely learnt a lot from Tencent, which has its own food-delivery business; and has other expertise from other firms, there is potential for synergies between the businesses.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said Prosus “has a better deal for Just Eat shareholders. Whether it is a fair price or not depends on Just Eat shareholders’ risk tolerance and expected future returns from the growth of the food delivery market.
“If I were a Just Eat shareholder, I would accept whoever comes with the highest cash offer, as we believe valuations are currently high for companies in this sector and there may be an opportunity to re-enter the sector at cheaper levels over the medium term, especially if the global economy continues to slow.”
Prosus’s Van Dijk said its cash offer “provides compelling and certain value to shareholders at a premium to the Takeaway offer and removes the downside risk for Just Eat’s shareholders”.
Earlier in November, Prosus published its offer document and lowered the threshold for shareholder approval to 75% from 90%, which is in line with a rival bid from Amsterdam-based Takeaway, though the quantum of the offer remains unchanged.