When it comes to M&A, cash is usually king.
Not so for Just Eat which on Tuesday rejected an improved offer from Prosus saying the new bid still “significantly undervalued” the U.K. food delivery company.
Prosus, the Amsterdam-listed investment vehicle of South Africa’s Naspers, hiked its offer from 710p a share to 740p a share on Monday, valuing Just Eat at £5.1 billion and shareholders have until December 27 to decide.
That still isn’t enough for Just Eat which says it will continue to back its planned all-share merger with Dutch rival Takeaway.com. As Jitse Groen, chief executive of Takeaway put it: “A slightly higher derisory cash bid remains a derisory cash bid.”
Just Eat says the improved bid from Prosus represents a 5% discount to its closing share price on Friday, the last business day before the new offer.
In a statement, Just Eat said: “[The] board of Just Eat continues to believe the Prosus offer fails to reflect appropriately the quality of Just Eat and its attractive assets and prospects, the benefits of first-mover advantage in a consolidating sector, and, on the basis of its own analysis, the future upside available to Just Eat shareholders through remaining invested in Just Eat and the Takeaway.com combination.”
Just Eat and Takeaway announced plans to merge in July in an £8.2 billion deal that would create the world’s biggest online food-delivery company outside China and a significant rival to Uber’s (UBER) Uber Eats.
At the time, Takeaway’s offer valued Just Eat at 731 pence a share. However since then, Takeaway’s shares have since fallen, reducing the value of its bid which was worth 685 pence a share on Tuesday.
Shares in Just Eat were slightly lower at 780 pence in London trading on Tuesday. Prosus was trading down 1.5% at €59.15
Prosus will have to cough up a lot more to convince the board to entertain its offer.
U.S. activist investor Cat Rock Capital, which owns 2.5% of Just Eat and 5.9% of Takeaway, is backing the Dutch company’s offer and says it will only throw its weight behind Prosus if it hikes its bid to 925 pence a share. Standard Life Aberdeen, another top shareholder, wants to see Prosus pay around 850p.
That’s quite a jump from 740p which Prosus claims is already at a premium of 26.5% to Just Eat’s closing price the day before it made its interest public.
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December 11, 2019 at 12:14AM
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Just Eat Wants More Money From Prosus to Scrap Its Merger With Takeaway.com - Barron's
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