The bid for British food delivery service Just Eat by the Takeaway.com presents “significant risks” for shareholders, alleged technology company Prosus, which is a rival suitor for Just Eat, on Wednesday.
These comments made by Prosus’s against Takeaway were made after a period of two crucial week during which the share price of Takeaway has risen sharply to such a point that the company’s all-share offer for Just Eat is now almost the same in value as that was made earlier by Prosus which was an all cash deal offer at 4.9 billion pound or $6.3 billion.
Takeaway’s offer “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 rival companies such as Uber Eats and Deliveroo, Prosus said in a statement.
However the argument put forward by Takeaway in support of its rivaling bid for Just Eat is that the bid, which is supported by the board of Just Eat, will help in the creation of a global force in the food ordering industry and will also result in savings of 20 million euros in costs over the longer period by the combination of the two companies.
A formal offer for Just Eat was placed by Takeaway earlier on Wednesday wherein the cpany asked that shareholders of Just Eat to tender their shares by December 11 which is the deadline for the expiry of the bid offers for Just Eat by both the contenders.
An advice to the shareholders of accepting the offer from Takeaway was issued by Just Eat’s board and also said that the board of the company does not support the acquisition offer made by Prosus because the offer “significantly undervalues” the company, the board said.
Just Eat was valued at 698 pence or 4.76 billion pounds as of the close of trade on Tuesday according to the offer from Takeaway. The founder of Takeaway Jitse Groen is also set to become the CEO of the new entity if the deal goes through.
The price of Just Eat shares was at 752.4 pence on Wednesday which showed that the shareholders believed that the value of the bid will rise.
“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,” Prosus’s statement said.
There was no immediate response of the criticisms of Prosus from Takeaway. However the company has said in a statement on November 12 that it expected to incur costs “in the tens of millions” towards the repositioning of the new entity if the deal goes through, in the long term which would include launching of its “Scoober” service which is the company’s branded delivery service in the United Kingdom.
Takeaway had adopted a strategy of becoming the most important player in the online food ordering industry in the Netherlands and Germany and the company views that the food delivery business is a supplementary business that does not have good profit margins.
The combined strength of Takeaway and Just Eat stand “in stark contrast with most other food delivery websites, which are loss-making and in our opinion, will likely never become profitable,” said CEO Groen on November 11.
(Adapted from Reuters.com)