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Oct. 29, 2019, 11:30 a.m. EDT

What’s eating Cat Rock? The investor dispute over food delivery firm Just Eat

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By Lina Saigol


Just Eat

The bidding war for Just Eat has become increasingly acrimonious after activist investor Cat Rock Capital on Monday launched a scathing attack on Prosus, accusing it of “undermining” the sale of the U.K. online food-delivery company.

Prosus, the Dutch-listed vehicle owned by South African tech conglomerate Naspers, last week made a £4.9 billion hostile cash bid for Just Eat /zigman2/quotes/205192708/delayed UK:JE +0.28%  in an attempt to gate-crash its already agreed merger with Takeaway.com, a Dutch food-delivery company.

Cat Rock alleged that Delivery Hero /zigman2/quotes/202519651/delayed DE:DHER +0.79% , the online food delivery company which is 22% owned by Prosus, was selling shares in Takeaway /zigman2/quotes/201653805/delayed NL:TKWY +1.57% to artificially lower the price of Takeaway’s stock and make its bid for Just Eat less attractive to shareholders. Cat Rock owns 3% of Just Eat as well as 5.6% of Takeaway.

“Delivery Hero structured its share sales in a bizarre and uneconomic fashion that seems deliberately intended to depress Takeaway.com’s stock price in the run-up to the shareholder vote on a merger with Just Eat,” Cat Rock said in a statement to the London Stock Exchange.

In September, Delivery Hero sold three million shares it owned in Takeaway at a minimum of €73 each.

“We categorically refute all allegations made by certain parties regarding [Takeaway shares sale],” Delivery Hero said in a statement.

Prosus said the Just Eat share price the day before it announced its offer stood at just 589 pence, even with the premium offered by Takeaway.

“In our view, this price reflected the market’s disappointment in the continued weak performance of the business, as most recently evidenced in their Q3 update,” the company said in emailed comments. The competitive pressures the business is facing mean that it needs “significant” investment to compete successfully, said Prosus.

“We intend to invest in the business in order to ensure it remains competitive,” said the company.

On Monday Takeaway issued a statement asking Delivery Hero to abstain from voting on its acquisition of Just Eat, claiming a conflict of interest.

“Delivery Hero’s own market position as well as Prosus’ position as the largest shareholder in Delivery Hero in itself gives rise to a conflict of interest,” Takeaway said. Delivery Hero operates in 41 countries and owns a 55% stake in Brazilian startup iFood and a 39% stake in India’s Swiggy.

Prosus said it does not control Delivery Hero or play any role in its investment decisions.

Shares in Just Eat closed at 761.00 pence in London trading. Shares in Prosus /zigman2/quotes/214038022/delayed NL:PRX +0.90%  were up 1.8% at 63.61.

Just Eat and Takeaway announced plans to merge in July in an £8.2 billion deal which would create the world’s biggest online food-delivery outside of China and a competitor to Uber Eats.

Prosus had hoped that its all-cash offer of 710 pence a share would beat Takeaway’s all-stock offer, which valued Just Eat at 731 pence a share. However, the decline in Takeaway’s share price since then has reduced the value of the deal to around 594 pence a share.

Several investors in Just Eat also rejected the offer from Prosus. SM Trust, the biggest investor in Just Eat with a 13% stake, called for a higher offer, while Aberdeen Standard Investments, the fifth-biggest shareholder with a 5% stake, said Prosus would need to increase its offer by at least 20% to be considered attractive.

A spokesman for Prosus said: “We believe our offer is superior and provides certain value to shareholders and we look forward to discussing it with them in the coming days and weeks.”

Cat Rock said that it believed Takeaway’s offer for Just Eat valued the U.K. company at 1,200 pence per share by the end of 2020, based on the 2021 consensus revenue forecasts for each company and a multiple of 7.5 times forward revenue.

/zigman2/quotes/205192708/delayed
UK : U.K.: London
783.80 p
+2.20 +0.28%
Volume: 1.71M
Dec. 11, 2019 4:35p
P/E Ratio
135.14
Dividend Yield
N/A
Market Cap
£5.32 billion
Rev. per Employee
£161,688
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/zigman2/quotes/202519651/delayed
DE : Germany: Frankfurt
49.53
+0.39 +0.79%
Volume: 20.00
Dec. 11, 2019 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
N/A
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/zigman2/quotes/201653805/delayed
NL : Netherlands: Euronext Amsterdam
84.20
+1.30 +1.57%
Volume: 154,538
Dec. 11, 2019 5:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€5.07 billion
Rev. per Employee
€86,944
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/zigman2/quotes/214038022/delayed
NL : Netherlands: Euronext Amsterdam
59.39
+0.53 +0.90%
Volume: 645,638
Dec. 11, 2019 5:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€95.62 billion
Rev. per Employee
N/A
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