PRX Prosus NV

By Adria Calatayud

Dutch food-delivery group Takeaway.com NV (TKWY.AE) will join forces with its U.K. peer Just Eat PLC (JE.LN), after emerging as the winner of a bidding war with Prosus NV (PRX.AE). The deal combines two of the largest meal-delivery platforms in Europe at a time when the industry is moving toward consolidation worldwide.

Who's who?

Just Eat is a London-based food-delivery company with operations in 13 countries. Founded in a Danish basement in 2001, it was one of the pioneer online food-ordering platforms which, like GrubHub Inc. (GRUB) in the U.S., acts as middleman between restaurants and customers.

Takeaway.com is an Amsterdam-based food-delivery company which operates in ten European countries and Israel. It was founded by Chief Executive Jitse Groen in 2000, when he was a student. Takeaway.com focuses its operations on a marketplace business model--linking restaurants to diners--but also has its own delivery-logistics unit, Scoober.

Prosus is a Dutch technology investor which last year was spun out of South Africa's Naspers Ltd. (NPN.JO). Naspers, which owns a near-third stake in Chinese internet giant Tencent Holdings Ltd. (0700.HK), still holds a majority interest in Prosus. Online food delivery is one of Prosus's key areas of investment. The company holds stakes in Germany's Delivery Hero AG (DHER.FF), India's Swiggy and Brazil's iFood--also backed by Just Eat.

Why Just Eat?

Just Eat is the leading food-delivery platform in the U.K. and most of the markets where it operates but has been losing market share to startups with deep-pocketed backers like London-based Deliveroo, Uber Technologies Inc.'s (UBER) meal-delivery arm Uber Eats and Spain's Glovo. Shares in the company, which listed on the London Stock Exchange in 2014, peaked in February 2018, but took a hit after Just Eat launched its own delivery services to fend off competitors. Peter Plumb stepped down as chief executive in January 2019 following an activist campaign by U.S. investor Cat Rock Capital Management LP, and Just Eat has been without a permanent CEO since then.

How is the deal structured?

Takeaway.com's all-share offer will give Just Eat shareholders a 57.5% stake of the combined group while Takeaway.com investors will hold the remaining 42.5%. Just Eat shareholders will be entitled to receive 0.12111 new Takeaway.com shares for each Just Eat share held. This valued Just Eat at around 6.25 billion pounds ($8.17 billion), or 916 pence a share, based on the closing share price of the Dutch company on Dec. 18, the last day before its final bid was made.

What took so long?

Takeaway.com and Just Eat first said they were in talks to combine their businesses in late July. A merger agreement was reached a few days later. Under that agreement, Just Eat shareholders would have owned 52.12% interest in the combined group and the U.K. company was at 731 pence a share. However, Just Eat investors Aberdeen Standard Investments and Eminence Capital LP publicly criticized the deal's terms, arguing that the U.K. company deserved a higher price.

Prosus made an all-cash offer in late October, gatecrashing Just Eat's planned merger with Takeaway.com, but its 710 pence a share bid was promptly rejected by the U.K. company's board. Prosus and Takeaway.com then entered into a war of words, exchanging accusations over the other party's efforts to take over Just Eat.

Delivery Hero--which counts Prosus as its largest shareholder--in September started selling shares in Takeaway.com, which hurt the Dutch company's share price and lowered the value of its offer for Just Eat. Cat Rock--an investor in both Takeaway.com and Just Eat--accused Delivery Hero of undermining the sale process of the U.K. company. Delivery Hero said it categorically refuted all allegations. Takeaway.com asked the Berlin-based company to refrain from voting on the Just Eat deal, citing a potential conflict of interest.

Although Prosus increased its offer to 740 pence a share on Dec. 9, Just Eat's board stuck to its recommendation of the combination with Takeaway.com. Both suitors put in their final, sweetened offers for Just Eat on Dec. 19--Takeaway.com gave Just Eat shareholders a larger slice of the merged group and Prosus raised its cash bid to 800 pence a share.

What's next?

Just Eat and Takeaway.com said their combination will create the largest food-delivery platform outside of China, with No. 1 positions in 15 out of the 23 countries where it is present. The companies said that combined they had 360 million orders in 2018 worth about 7.3 billion euros ($8.11 billion). The chief executive will be Takeaway.com's CEO Mr. Groen and it will be chaired by Just Eat Chairman Mike Evans.

Takeaway.com pledged to explore options to exit Just Eat's investment in iFood after completion of the deal. If Just Eat's 33% stake is sold, half of the net proceeds would be returned to shareholders of the combined group and the other half would be retained as the business invests to strengthen its competitive position. Analysts at Barclays said Prosus is the most likely buyer for Just Eat's stake, given it already has a large holding in the Brazilian company.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

January 10, 2020 10:03 ET (15:03 GMT)

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