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Just Eat investors tussle over 'grossly inadequate' Takeaway.com bid

Eminence Capital said the Takeaway.com bid for Just Eat significantly undervalued the FTSE 100 group, but rival hedge fund Cat Rock still backs the deal

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Just Eat PLC's (LON:JE.) takeover by Dutch rival Takeaway.com could soon fall apart or be hijacked by rival bidders, analysts have suggested, after a second major investor objected to the "grossly inadequate" terms of the deal.

Eminence Capital, a hedge fund with what it says is a 4.4% beneficial holding, put out a statement suggesting the agreed Takeaway.com bid for Just Eat significantly undervalued the FTSE 100 takeaway food specialist, following similar resistance from fellow investor Aberdeen Standard.

“It is clear to us that TKWY’s offer of a 15% premium to JE’s closing price on July 26 is highly opportunistic,” said Ricky Sandler, chief executive and chief investment officer of Eminence.

“The proposed financial terms are far too favorable to TKWY shareholders and far too unfavorable to JE shareholders. Accordingly, we intend to vote against this arrangement,” he said.

The Takeaway.com bid, which was announced last month, would see Just Eat shareholders receive 0.09744 new Takeaway.com shares for each of their shares.

When the deal was first agreed, this valued Just Eat at around £4.7bn, but at Monday's closing price of 775.8p the group has a market valuation of £5.3bn.

Between Cat Rock and a hard place?

US hedge fund Cat Rock Capital, which is a shareholder in both Just Eat and Takeaway.com and has been very voal in criticising the Just Eat board and pushing for corporate action, has kept quiet until Tuesday.

“Voting against the Just Eat and Takeaway.com merger benefits no one but Just Eat’s competitors," said Alex Captain, Cat Rock's managing partner.

“This merger creates a strong global leader in online food delivery with high-quality assets, world-class leadership, and a compelling valuation for a combined business with great growth potential. We think it is clear that Just Eat shareholders should vote for this merger unless a more compelling and credible counter-offer emerges.”

But broker Liberum said it is "increasingly likely the Just Eat bid will not be agreed".

"We would also agree the bid undervalues the company and it is likely that other bidders will emerge, with the soon to be listed Prosus the most likely candidate in our view," analysts said, adding that the likes of Amazon and Uber Eats are likely to be discouraged by the recent pronouncements by UK competition authorities.

Prosus, which is a spin-off from South Africa's Naspers, is also a major investor in iFood, a joint venture between Just Eat and Brazil's Movile, in which Just Eat holds a 30% stake.

Just Eat shares were down 1.7% to 762.8p on Tuesday morning.

-- Adds Cat Rock comment and updates further fall in shares --

Quick facts: Just Eat Takeaway.com NV

Price: 7205 GBX

LSE:JET
Market: LSE
Market Cap: £4.41 billion
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