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On the same day that Just Eat published the scheme document in relation to its merger with Takeaway.com N.V., Prosus N.V., the investments vehicle of Naspers Limited, an unsolicited offer of £4.9 billion for the group.

In its approach, Prosus said that Just Eat’s Q3 financial results showed that growth was slowing and that the business needs a ‘substantial investment’ which Prosus believes it can provide. Further, the company believes that the Just Eat-Takeaway merger would not give Just Eat this investment. Prosus is a leading operator and investor in food delivery, having backed names such as iFood (Brazil), Delivery Hero (Germany) and Swiggy (India), and in its offer Prosus draws on this experience of investment to make the case to Just Eat shareholders.

It is hoped that a Just Eat-Takeaway merger would create a leading global online food delivery marketplace, operating in 23 countries and partnering with over 155,000 restaurants. Such a group would be able to compete with Uber Eats and Deliveroo, the latter of which received an investment from Amazon. The threat from these two companies is substantial. Prosus however believes that its offer and the investment it will put into Just Eat offers better value than the merger with Takeaway. The company for example states that Takeaway.com invested in an acquisition, Scoober. Scoober then only represented 4.9% of Takeaway.com’s reported total orders in the first half of 2019.

Prosus’ hostile bid comes just as there was evidence of investor dissent building up in the Just Eat/Takeway merger. Eminence Capital, the New York-based hedge fund which owns around 4% of Just Eat criticised the merger as a ‘gross undervaluation’.  Similar criticism was echoed by Aberdeen Standard Investments, one of the company’s top 10 shareholders. The merger values Just Eat shares at 731p a share (giving an offer value of £4.98 billion), but Just Eat has traded higher than this price since the announcement in August. Takeaway’s Share price was €83.50 on 29 July 2019, at the time it announced a possible merger with Just Eat. It dropped to €76.20 on 5 August 2019 when Just Eat and Takeaway announced the terms of the merger had been agreed and dropped further to €72.95 when Prosus announced its bid.

Just Eat have published a rejecting the bid on the basis that Prosus has significantly undervalued Just Eat and its assets and stating that it had unanimously rejected offers by Prosus for 670p a share and subsequent offers for 700 and 710p when negotiating before Prosus decided to make its announcement.

Just Eat plc is FTSE100 company which has a large presence in Europe and globally: in Europe, it is present in the UK, Denmark (where it was founded), France, Ireland, Spain, Norway and Switzerland, as well as having customers in Australia, New Zealand and Mexico. It is around 27 million customers and 107,000 restaurant partners.

The Takeaway.com N.V. Group which was founded in 2000, has partnerships with nearly 50,000 restaurants and operates in 10 European countries. It is leading a number of countries in terms of number of orders in the Netherlands, Germany, Belgium, Austria, Poland and Israel.

Prosus N.V. is a listed company in Amsterdam and is majority owned by Naspers Limited, a South African listed company which is heavily invested in technology and recently, the online food delivery sector.

Market Tracker will continue to monitor this transaction as it develops.