Just Eat has rejected Naspers spin-off Prosus’s higher bid saying that the latest offer still significantly undervalues the company.
Prosus raised its offer for the UK food delivery firm by 4.2% to £7.40/share offer on Monday. Just Eat advised shareholders to stick with an all-share combination with Takeaway.com in a statement on Tuesday.
Just Eat’s stock has been trading above the offer price as shareholders hold out for a bigger premium. It closed at £7.81 in London trading on Monday valuing the company at about £5.3-billion.
Analysts at Liberum said that the offer undervalued the company and was likely to be rejected by shareholders, while other analysts said Prosus’s bid could put pressure on Takeaway to bump. Cat Rock Capital Management, which owns shares in both Takeaway and Just Eat, has said a Prosus cash bid would need to be £9.25 to compete with the merger.
The Just Eat board recommends the Takeaway offer, which is “based on a compelling strategic rationale that allows shareholders to participate in the upside potential of the enlarged group and, based on its own analysis, will deliver greater value creation to Just Eat Shareholders than the Prosus offer of £7.40/share in cash”, the company said in the statement.
Uber Eats rival
While the Takeaway.com deal values Just Eat shares at about £6.94, the merger would create a sizeable European food-delivery company to compete with the likes of Uber Eats. Just Eat shareholders would own about 52% of the newly combined company.
Shareholders have until 27 December to accept Prosus’s new offer. Prosus needs investors with more than 50% of shares to agree to the deal for it to go through. — Reported by Amy Thomson, (c) 2019 Bloomberg LP