Prosus, an arm of South African internet giant Naspers, announced on Tuesday a bid that would derail the planned merger with Dutch delivery rival Takeaway.com, driving the UK group’s shares up by over 20% - beyond the offer proposed on that day.
It 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.
“In our view, Prosus would need to raise their cash offer by at least 20% in order for it to be deemed attractive,” Frederik Nassauer, investment director at Standard Life, was quoted as saying by Reuters.
The investment group reportedly holds 5.2% stake in Just Eat.
Prosus's bid is still around 20% higher than the latest 594p valuation of the all-paper offer agreed in August with Takeaway.com, which is likely to issue a counter-offer according to analysts at Jefferies.
“If the selling pressure continues in the coming weeks, we believe the currently proposed merger ratio will not be sufficiently attractive for Just Eat shareholders and hence might put the proposed merger at risk,” Nassauer added.
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.
Shares were little changed at 745p on Wednesday afternoon.