Prosus
Prosus

Tech giant Prosus has called on Just Eat shareholders to accept its offer and reject that of rival Takeaway.com.

Just Eat has rejected a £5bn hostile swoop by Prosus, the Dutch arm of South Africa internet titan Naspers. Its board is instead recommending investors support a planned merger with Takeaway.com that was announced this summer.

The Euronext and JSE-listed tech giant owned by Naspers has made a bid of 4.9 billion pounds ($6.35 billion or R94 billion) or 710 pence a share, in cash. For more read: Naspers’ Prosus Makes R94bn Bid For Just Eat

The offer, Prosus said, represented a 20% premium on the 594p-per-share that Just Eat has agreed with Takeaway.

On Wednesday, Prosus urged Just Eat shareholders to accept its offer as soon as possible and, in any event, by no later than the first closing date, being 1.00pm (London time) on 11 December 2019.

Prosus chief executive, Bob van Dijk, said today: “We are excited about the prospect of adding Just Eat to our portfolio of leading global Food Delivery businesses and believe we are best positioned to address both the market opportunity and the challenges facing the company.”

Prosus is at the forefront of the global transformation in Food Delivery from marketplace to own-delivery and beyond, with the Food Delivery businesses in our portfolio that are leaders in their markets delivering superior growth, he explained.

“As a group, we have a proven track record in supporting the long-term growth and success of companies that we invest in. As well as our ability to invest, we also bring the learning and expertise we have gained over the past two decades across more than 120 countries and numerous leading consumer internet businesses. We, therefore, believe that we are best positioned to help Just Eat and its management team in the next phase of the company’s development.”

Van Dijk said Prosus’ cash offer provides compelling and certain value to shareholders at a premium to the Takeaway.com offer and removes the downside risk for Just Eat’s shareholders.

“Our offer also reflects the substantial investment required in product, technology, marketing and own-delivery capabilities to make the most of Just Eat’s long-term potential. We believe that the Takeaway.com offer underestimates the substantial investment required in Just Eat to recapture market share and improve performance in an increasingly competitive sector undergoing global transformation.”

This statement follows the publication of the offer document in respect of the Takeaway.com offer, the financial terms of which are unchanged from those contained in Takeaway.com’s announcement on 5 August 2019.

Prosus said it believes that Takeaway.com takes a narrow view of the Food Delivery sector-based principally on its experience in the Netherlands and Germany – markets that have so far been relatively insulated from innovative global own-delivery competitors.

On the other hand, in the UK both Uber Eats and Deliveroo have been operating at scale for several years, and consumers have come to expect superior restaurant selection and service quality that Prosus believes would be difficult for Just Eat to match without substantial investment and innovation.

The tech giant owned by Naspers said Takeaway.com continues to underestimate the scale of Just Eat’s required transformation and the investment needed in own-delivery, marketing, product and technology. “In particular, Takeaway.com’s claim that it can achieve a meaningful own-delivery rollout with no impact on the bottom line and through only tens of millions of investment is, in Prosus’s view, unrealistic and demonstrates their lack of experience with the own-delivery business model.”

The company added that the Takeaway.com offer creates significant risks for Just Eat’s shareholders.

“Takeaway.com is trading at the highest valuation multiples amongst its peers. Prosus believes that at these valuation levels there is little room for any slowdown or missteps in execution,” the company warned.

In the absence of required investment, Prosus believes that Just Eat’s operational underperformance is likely to continue, putting the combined valuation under pressure, as highlighted in a similar context in the US where Grubhub suffered a 43% share price decline in a day following its Q3 2019 results.”

Prosus is a strategic global investor and operator focused on creating long-term value by building and scaling consumer internet businesses through organic growth and strategic M&A. It aims to build strong companies that create value by addressing big societal needs in high-growth markets with long-term potential.

The company owns big food delivery brands such as iFood, Swiggy and DeliveryHero.

Prosus came to market in September 2019 through the listing of the international internet assets of Naspers, a global consumer internet group and remains 74.06% owned by Naspers.

Its businesses and investments serve more than 1.5 billion people in 89 markets and are amongst the leading players in 77 of those markets. The group directly employs more than 20,000 people globally, with many more employed by its associates.

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