Takeover Bids Intensify for Just Eat Food App

(Bloomberg) --

Prosus NV has raised its bid for U.K. food delivery firm Just Eat Plc as it tries to win over investors and beat out an offer from rival Takeaway.com NV.

The technology investment company, spun out of Naspers Ltd., increased its cash offer by 4.2% to 740 pence per share, valuing Just Eat at about 5.1 billion pounds ($6.7 billion), Prosus said in a statement on Monday. Just Eat advised its investors to take no action while it evaluates the new bid.

“A slightly higher derisory cash bid remains a derisory cash bid,” Jitse Groen, CEO of Takeaway.com, said in a statement.

Just Eat’s management has been encouraging investors to vote for Takeaway’s all-share deal, which would give them scale and access to Takeaway’s technology, arguing that Prosus’s offer undervalued the company even as a slide in Takeaway’s share price pushed down the value of its all-stock offer. As of Friday, after a monthlong rally, Takeaway’s bid valued Just Eat shares at 710 pence each.

Shareholders have until Dec. 27 to accept Prosus’s new offer. Prosus needs investors with more than 50% of shares to agree to the deal for it to go through.

Investors have been holding out for more. Just Eat’s shares have been trading above both offers. The stock rose 5.8 pence to 782.8 pence at 10:44 a.m. in London on Monday. Takeaway shares fell 2.4% and Prosus declined 0.2% in Amsterdam.

Aberdeen Standard Investments, which holds about 5% of Just Eat, said previously that Prosus needs to increase its offer by 20%. The investor also wanted Takeaway to increase its bid. Eminence Capital, which holds about 4%, in September said Takeaway’s bid undervalued Just Eat and that it planned to vote against that deal.

Cat Rock Capital Management, which owns shares in both Takeaway and Just Eat, has been lobbying Just Eat holders to take the Takeaway deal and has said that the combination would create a company worth 1,200 pence per share by the end of next year. The firm said a Prosus cash bid should be 925 pence to compete with the Takeaway merger.

“Prosus continues to dramatically undervalue Just Eat with its revised 740p per share offer,” Cat Rock said on Monday. “This revised Prosus offer is wholly inadequate and shows Just Eat shareholders that Prosus cannot muster a credible bid.”

Prosus has size on its side. The $108 billion market cap technology investment vehicle was spun out of South Africa’s Naspers Ltd. in September. It has $5.4 billion in cash to help fund the offer and “sufficient financial resources to cover for its bid beyond current terms,” analysts at Jefferies Financial Group Inc. said in a note in clients. Still, the relatively modest raise, about 4.2% higher than its previous offer, indicates Prosus is being “careful not to overpay.”

Prosus owns stakes in similar companies globally, including a 22% stake in German delivery company Delivery Hero, about 39% of India’s Swiggy and 55% of Brazil’s iFood.

The firm announced its hostile bid in October for Just Eat, challenging the offer from Takeaway that was due to go through by the end of the year. The deal would be much more transformational for Takeaway, which has a market value of about $5.8 billion. Under that offer’s terms, Just Eat shareholders would own about 52% of the combined company.

Takeaway has so far pushed back against increasing its bid for Just Eat. “I don’t want to be the idiot that runs into a ratio that doesn’t make any sense,” Jitse Groen, Takeaway’s CEO and founder said in November.

--With assistance from David Hellier.

To contact the reporters on this story: Amy Thomson in London at athomson6@bloomberg.net;Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.net

To contact the editor responsible for this story: Giles Turner at gturner35@bloomberg.net

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