viewJust Eat Takeaway.com NV

Just Eat back on the menu as South African giant launches hostile bid

Naspers is offering Just Eat shareholders 710p in cash for each share, a 20% premium on a 594p merger agreed in August with Dutch group Takeaway.com

Just Eat PLC - Investors chow down on Just Eat as South African e-commerce giant launches hostile bid
Just Eat recommended that its investors reject the offer

Investors tucked into shares in Just Eat PLC (LON:JE.) on Tuesday after the online takeaway group received a hostile takeover bid from a company owned by South African e-commerce giant Naspers, looking to derail its planned merger with Takeaway.com.

The conglomerate's Prosus arm has offered shareholders 710p in cash for each Just Eat share, a 20% premium on its Monday close price, valuing the entire company at around £4.9bn.

READ: Just Eat eyes December merger vote as growth slows

Coming a day after Just Eat's disappointing quarterly results, Prosus's bid is around 20% higher than the latest 594p valuation of the all-paper offer agreed by the UK group and Dutch delivery rival Takeaway.com in August.

Just Eat and Takeaway.com are looking to combine and create one of the world’s largest online food delivery platforms, however, the deal has attracted criticism from shareholders who believe the merger undervalues to company.

At least two major investors have gone public to complain, with hedge fund Eminence Capital and Aberdeen Standard last month objecting to the terms of the deal.

Rebuffed by the board

Naspers, which is of the world’s largest technology investors and currently hold stakes in a number of online takeaway firms including Germany’s Delivery Hero, is already well known to Just Eat as Johannesburg-listed Prosus is a major investor in its 30%-owned Brazilian joint venture, iFood.

Saying it had made several approaches to Just Eat’s board but been rebuffed each time, Naspers said it has decided to take the offer directly to shareholders.

It believes the company needs “substantial investment” above that currently planned by Just Eat’s management and that the merger with Takeaway.com would not “fully or effectively” address these requirements.

Just Eat quickly hit back at the hostile bid on Tuesday morning, recommending that investors reject the offer because it “significantly undervalues” the firm, saying it had turned down Naspers offers at 670p, 700p and 710p per share.

“Just Eat..believes that the [offer] fails to appropriately reflect the quality of Just Eat and its attractive assets and prospects, the benefits of first mover advantage in a consolidating sector, and the significant future upside available to Just Eat shareholders through remaining invested in Just Eat and the Takeaway.com Combination”, the company said in a statement.

Naspers’ bid, however, seemed to have sparked speculation of an impending bidding war and the shares soared 24.4% to 733.4p in late-morning, more than 3% above Nasper’s offer price suggesting shareholders expect a higher counter bid.

Analysts predicts counter offer

Takeaway.com, said analysts at Jefferies, "will likely counter".

Neil Wilson at Markets.com said that a counter bid had always been a strong possibility following Takeaway.com’s “low-ball offer”, and that a price closer to 750p per share would be needed to resolve the contest.

“[Naspers] has sniffed an opportunity as the all-stock offer from Takeaway.com has left JE shareholders nursing paper losses due to a drop in Takeaway.com shares… The more Takeaway.com shares fell after the bid the less attractive the offer and the greater the likelihood of a cash counter bid”, he said.

Wilson added that Naspers’ bid will “up the ante” and could force Takeaway.com to increase its offer as it was now in a weakened position due to the decline of its stock, which has fallen around 15% from a six-month high on 30 August to €74.

Broker Liberum last month set a share price target for Just Eat at 1,360p based on a discounted cash flow analysis, including a valuation for Just Eat's stake in iFood at a “very conservative” £600mln.

Quick facts: Just Eat Takeaway.com NV

Price: 8684 GBX

Market: LSE
Market Cap: £5.32 billion

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