A major Just Eat shareholder has urged fellow investors to back a takeover offer from Takeaway.com, saying the deal was necessary to avert the firm’s “terrible value destruction”.
Cat Rock Capital, which holds a stake of roughly 2.6 per cent in the delivery firm, today threw its weight behind Takeaway’s offer, which values Just Eat’s shares at about 690p each.
“A Just Eat merger with Takeaway.com would create a formidable global leader with significant growth prospects and world-class management,” founder and managing partner Alex Captain wrote in an open letter.
“We believe this combined company could comfortably be worth over 1,200p by the end of 2020, providing Just Eat shareholders with 60 per cent upside to the current share price.”
The investment firm argued that a rival bid tabled by Prosus “significantly undervalues” Just Eat and was a less attractive proposition for shareholders.
“Prosus has a strong incentive to overstate the challenges facing Just Eat, and we deeply disagree with their characterisations of both Just Eat and Takeaway.com,” it said.
The intervention echoes calls by the Just Eat board to shareholders to support a merger with Netherlands-based Takeaway in a deal that would combine the two most profitable food delivery sites in Europe.
For its part, Prosus, a subsidiary of South African investment firm Naspers, has urged shareholders to back its higher 710p per share offer, saying the bid from its Dutch rival carried “significant risks”.
Cat Rock also argued that a merger was vital to help Just Eat beef up its offering in the face of tough competition from rivals such as Deliveroo.
“A Just Eat standalone case would continue the terrible value destruction and lost opportunities that the company has suffered since [co-founder and former chief executive] David Buttress’s departure almost three years ago.
The deadline for first acceptance on both offers will occur on 11 December. The bids are conditional on receiving the approval of 75 per cent of shares.