An activist investor of the British online takeaway service platform Just Eat is putting pressure on the company get merged with a rival instead of the company looking for and appointing a new chief executive.
An open letter, demanding a merger with another online food delivery company within the next few months, was sent to the board of Just Eat by Cat Rock Capital Management which is a US based hedge fund firm that is the owner of 1.9 per cent share in the company.
The investing firm expressed “deep concern regarding the board’s recent appointment of executives who lack online food delivery experience to critical roles at the company, repeating the mistake the board made by appointing Peter Plumb as CEO.”
“A merger with a well-run industry peer would be a far better outcome for shareholders than relying on the board to choose a new CEO, particularly given the board’s poor record of CEO selection,” said Cat Rock.
A threat of further action before Just Eat’s annual meeting on 1 May in case its demands are not adhered to by the company was also issued by the hedge fund investor. Cat Rock pointed to remarks from Jitse Groen, the owner of the Dutch rival Takeaway.com, in which the hedge fund holds a 4.9 per cent stake. Together with the Netherlands and Poland, the UK is one of the best three markets in Europe, he has said and that it his intention of being globally active. Founded in 2000, Takeway.com is operational in 10 countries in Europe and Israel and Vietnam.
“We take communications with all our shareholders extremely seriously. As announced previously, we are carrying out a thorough CEO appointment process and we will update the market as appropriate,” said spokesperson for Just Eat.
Plumb had joined the Just Eat from Moneysupermarket.com just 18 months ago and left the organization about three weeks back. Soon after joining, he had initiated a drive of investments which had a sharp slowing impact on earnings growth and it is what is believed to have angered several shareholders.
The technology of Just Eat was upgraded under Plumb and a self owned delivery of the company was launched by him so that the company could become more competitive and fight rivals such as Deliveroo and Uber Eats. Both the rivals however had been making huge losses in their drive to capture more market share. The establishment of Just Eat was aimed at offering a marketplace for businesses which would essentially link restaurants that have their own delivery systems with customers.
In 2017, Just eat incurred a pre tax loss of £76 million and was dropped out of the FTSE 100 index following a 13 month stay in the index. In November, its share touched a low of 533.8p after the company issued a profit warning.
(Adapted from TheGuardian.com)