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Prosus really wants Just Eat

Puts compelling arguments on the table in its efforts to convince the online food platform’s shareholders.

Prosus management is putting in a lot of effort to convince Just Eat shareholders that a deal with Prosus is much better than the one their board of directors is bringing to the table.

Just Eat’s directors and some of its larger shareholders are keen to merge with Takeaway.com, but Prosus is not giving up.

Prosus CFO Basil Sgourdos is leading the charge with a handful of relevant figures to show the Just Eat shareholders and management that the future looks better with Prosus’s MIH Food Delivery.

In a conference call to journalists, analysts and fund managers on Monday morning, Sgourdos voiced strong arguments to try to convince shareholders to accept its rival hostile bid – the first of which is that the Prosus cash offer removes uncertainty around the future performance of the Takeway.com share price, which is currently trading near record levels.

Just Eat shareholders do not realise the downside risk of accepting Takeaway.com shares in exchange for their shares, said Sgourdos. “The Prosus offer gives certainty and is a fair offer.”

He said the offer of £7.20 per share represents a premium of 20% above the ruling market price at the time the offer was made, as well as a 20% premium to the Takeway.com offer at the same time.

Prosus published a presentation on its website to drive the points home, which include: 

  • Prosus is a leading global operator and investor in food delivery, with a proven track record.
  • Food delivery is going through a global transformation, with own-delivery key to success.
  • Just Eat is facing significant competitive pressure and requires investment in own-delivery, marketing, product and technology.
  • The investment market is underestimating the impact of the required transformation on Just Eat’s financials.
  • Combination with Takeaway.com would not address the challenges that Just Eat faces.

Prosus is able to make substantial investments in technology, marketing and delivery capability to transform Just Eat and increase its market share, said Sgourdos. “Prosus has the delivery expertise, a global portfolio of businesses and a good track record,” he added.

Delivery is key

Prosus believes the key to success in the food delivery market is to own and manage a food delivery service, rather than only offering an internet platform where people can order food, but remain limited to restaurants that already have their own delivery vehicles and drivers.

Offering ordering capability as well as a delivery service is key to growth, according Prosus.

The different Prosus food delivery companies have grown into a huge business. In Brazil, iFood is operating in more than 300 cities and delivers food for over 130 000 restaurants, while Swiggy in India delivers food from more than 130 000 restaurants and uses 210 000 delivery people.

Delivery Hero is the leading food delivery business in 34 of the 41 countries in which it operates, and is active in over 4 000 cities. It is growing to offer its service to 400 000 restaurants.

The Prosus presentation also says that iFood, Swiggy and Delivery Hero are growing much faster, as measured by the number of orders – by between 92% and 320% during the last year – compared with 21% for Takeaway.com and 16% for Just Eat.

Just Eat losing market share

Other figures show that Just Eat has been losing market share to its competitors, due to the fact that it relies on restaurants’ own delivery services rather than offering the better and more profitable solution of building its own delivery capability, according to the analysis.

The formal offer document and circular to shareholders that contains the full information of the offer was also published on Monday. The offer to Just Eat shareholders is open until December 11, but Prosus makes provision to extend the acceptance date in accordance with stock exchange rules and regulations.

An important condition of the offer is that Prosus wants to acquire a minimum of 75% of Just Eat for the offer to become effective. Depending on acceptance by December 11, Prosus will consider extending the offer to January 10, 2020.

The final result of the hostile offer to buy Just Eat will be announced by January 31.

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