October 29, 2019 / 3:07 PM / 8 months ago

Breakingviews - Just Eat bidders distracted by messy sideshow

Signage for Just Eat is seen on the window of a restaurant in London, Britain, August 5, 2019.

LONDON (Reuters Breakingviews) - Unattended cooking is the leading cause of house fires. Bickering bidders for Just Eat face a similar hazard if they fail to focus on what shareholders in the UK food delivery group care about most: a better offer.

The battle for Just Eat was always likely to turn nasty after Prosus, the 103 billion euro internet investor recently spun off from South Africa’s Naspers, last week launched a 4.9 billion pound cash offer for the leaderless UK company. It trumped an all-share agreed offer from Dutch rival Takeaway.com.

The messy relationship between Europe’s would-be food delivery kings – Prosus boss Bob van Dijk and his Takeaway.com counterpart Jitse Groen - has since produced a disorderly sideshow. Cat Rock Capital, which owns about 3% of Just Eat, on Monday accused van Dijk of helping drive down his rival’s share price before launching his own bid. The investor pointed to last month’s decision by Delivery Hero, which is part-owned by Prosus, to sell shares in Takeaway.com “in a bizarre and uneconomic fashion”. This had the effect of lowering the suitor’s offer for Just Eat, now worth about 4.2 billion pounds.

Delivery Hero and Prosus denied the accusation. Despite having 22% stakes, Prosus said it does not control its German affiliate’s investment decisions. Besides, Delivery Hero had no knowledge of its shareholders’ plans to bid for the UK company.

It’s easy to be suspicious of the timing of Delivery Hero’s sale. However, the German group announced its plans to sell in April, when the shares were trading at an all-time high, and before Takeaway.com launched its bid. Besides, the market value of food delivery companies has been falling as investors fret about the heavy cost of paying for deliveries. Shares in U.S.-listed GrubHub fell by as much 40% on Tuesday morning after it warned of slowing growth.

The spat risks distracting the bidders’ attention from their main priority: wooing Just Eat investors. Shareholders currently have a choice between van Dijk’s cash and Groen’s all-share offer. However, with Just Eat shares trading at a 6% premium to the Prosus bid, investors are clearly expecting a better price. The risk for the warring bidders is that their target slips away.


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