Just Eat Plc (LON: JE) have found themselves caught up in a bidding war for a potential takeover, driving up share prices significantly.
Just Eat have recently rejected a hostile £4.9 billion bid from investment firm Prosus NV (JSE: PRX), which has threatened its proposed merger with allies Takeaway.com (AMS: TKWY).
Chris Beauchamp, chief market analyst at spreadbetter IG said “It is now a firm target, having been approached by Prosus with a 710p cash bid.The response from the share price suggests that a bidding war is now in play, potentially sending the share price back towards the 900p high we saw in early 2018.”
Just Eat have responded by saying that Prosus have heavily undervalued their firm by offering 710p per share.
Liberum analysts said yesterday: “We are sceptical that the proposed merger will be accepted by Just Eat shareholders as we believe that it substantially undervalues the business”
Instad, Liberum analysts said the buy rating and target price of Just Eat shares were valued at 1,360p per share.
This was not the first approach that Prosus made after having bids of 670p, 700p and 710p per share, all have been rejected.
Prosus have commented saying “It believes the food delivery firm requires “substantial investment, in excess of that planned by Just Eat management. Prosus does not believe that the proposed combination with Takeaway.com will fully or effectively address this investment need”.
Bob Van Dijk, Prosus Chief Executive had his say on this affair. “We believe our global experience and resources can help Just Eat to achieve its significant potential. Our plan is to support the Just Eat management team, with whom we have worked closely as joint investors in Ifood, to deliver on the exciting opportunities to grow the business”
He concluded “We believe that Just Eat’s customers and restaurant partners will ultimately benefit from more delivery options, greater restaurant choice as well as improved service and delivery speeds driven by the combined group’s expertise in product and technology innovation supported by increased capital investment in the business. As a combined group, we see significant growth and value creation potential”
Just Eat and Takeaway.com agreed a merger deal in August, with shareholders set to vote on the deal on 4 December. However this approach has dampened the proposed takeover.
US asset manager Eminence Capital, hold a 4.4% stake in Just Eat said it planned to oppose to the deal.
Ricky Sandler, chief executive and chief investment officer of Eminence, said: “The proposed financial terms are far too favourable to TKWY shareholders and far too unfavourable to JE shareholders. Accordingly, we intend to vote against this arrangement.”
The bid war has now escalated with the three way negotiations set to unfold over the next few days.
Certainly, there has been a concerned effort by Prosus to not let Just Eat fall into the hands of Takeaway.com as Just Eat looks to deliver strong future performance.
Markets.com’s Wilson said “Prosus’ bid “is in many ways very cheeky and even more low-ball”, coming under Takeaway’s 731p merger price. Whilst it has been rejected, will certainly up the ante and could force Takeaway.com into raising its offer as it looks in a weakened position due to the stock’s decline,”
Wilson concluded “a bidding war is good news for shareholders. A merger/takeover of enough scale gives Just Eat and its interim CEO the perfect exit, whilst also creating a company with the scale and strength to take on Deliveroo, Uber Eats and Amazon.”
Yesterday, Just Eat announced revenue gains of 25% to £248 million and the news of this approach has certainly got shareholders excited.
Shares of Just Eat PLC are trading at 7.442p a 25.92% rise across Tuesday trading. 22/11/19 12:00 BST.