The launching of an initial antitrust investigation into the proposed acquisition of food delivery firm Just Eat by rival firm Takeaway.com’s in a deal worth £6.2 billion or $8.1 billion has put a temporary halt to the merger.
A review into the merger of the two companies had s been initiated by the Competition and Markets Authority (CMA) of the United Kingdom, the regulator said on Friday. The review or probe will be limited to examining whether the merger could result in a “substantial lessening of competition” within the UK. Interested parties have been asked to submit comments with the CMA be February 6.
The reconsidering of the position of the CMA was intimated to Takeaway.com on Thursday, the firm said, and added that the regulator has said that an investigation into the merger was now necessary.
The planned planned all-stock deal would get delayed by about a week because of the probe, Takeaway.com said in a further statement.
The proposed merger of the Netherlands-based Takeaway.com and UK-headquartered Just Eat was an anticipated reorganization of the food delivery industry of the UK, which will now get delayed, since the tow companies are major operators of the food delivery service in this fast growing industry of Europe. The rival Dutch firm Prosus – which is a tech investment wing of Naspers, had presented a rival bid for Just Eat which was countered by Takeaway.com for months.
A few months ago, the UK’s antitrust regulator had announced conducting a formal probe into a proposed investment by Amazon in UK food delivery start-up Deliveroo for a majority stake. Last year, a $575 million funding round for the buzzy online takeout app was led by the largest e-commerce company of the world. With a valuation north of $2 billion, Deliveroo is recognized as one of the success stories for British tech startups.
Investors in recent years have shown great interest in companies in the food delivery industry and analysts have been anticipating more consolidation in this industry globally. Earlier this week, United States based Uber said that its food delivery business sin India –Uber Eats, will be sold to a domestic operator Zomato while it will take up a minority stake in the Indian firm that has the backing of the investment arm of the Chinese tech giant Ant Financial. Uber CEO Dara Khosrowshahi said “consolidation has got to happen” after the deal.
More than 90 per cent of the shareholders of Just Eat will be selling their shared to Takeaway.com, the later has said. On January 31, the new combined firm will be renamed “Just Eat Takeaway.com NV”, Takeaway.com said. But the new entity will not be listed Until February 3 because of the company’s its updated timetable shares.
After the announcement of the probe by the CAM, there was a fall of 3 per cent and 4 per cent in the shares of Takeaway.com and Just Eat respectively.
(Adapted from CNBC.com)