The message out of a conference call Prosus financial director Basil Sgourdos had with Just Eat shareholders, share analysts and investors was that Prosus has a better offer for Just Eat and is a stronger business partner going forward than the partner its board of directors has set its heart on.

Prosus launched a late cash offer — directly to minority shareholders of Just Eat — in the final stages of a transaction that would see Just Eat and Takeaway.com merge to form a huge internet food delivery business delivering prepared meals to the value of more than £3-billion from more than 78 000 restaurants to consumers all over Europe.

The owners of the enabling Internet and smartphone application as well as delivery service for the takeaway meals are set to achieve revenues of more than €1.2-billion/year if the merger between Just Eat and Takeaway.com is consummated.

As an aside, it makes no sense to translate the pound sterling and euro amounts to rand as the numbers are simply too big to comprehend. The same goes when discussing the balance sheets of any of the parties involved in the proposed transaction.

Sgourdos might be right in his analysis that Prosus would make a better partner to Just Eat. It is a huge group with more than US$9-billion worth in cash and short-term assets and earning several billion in revenue per year. Its big long-term asset, its holding in the Chinese Tencent Internet giant, can readily be milked for a few billion in cash by a quick call to the local stockbroker.

As Sgourdos said in the conference call early on Tuesday: “Prosus keeps on moving forward. We are the world’s leading food delivery business.”

‘Proved our value’

He says that Prosus, through its MIH Food Delivery subsidiary, has demonstrated its ability in the industry. “We have proved our value and strength in partnering with businesses and shown our commitment to make investments as required,” he says.

It is also true, as he said, that Prosus has the right technology and innovative spirit to add value to businesses in the Prosus portfolio.

It suffered a loss of €30.9-million in the 2016 financial year, €42-million in the 2017 year and €14-million in the year to December 2018. Just Eat posted a profit of £79.9-million in 2018, indicating that Takeaway.com needs the deal more than Just Eat.

It remains to be seen if the cash offer of £5.94/share to Just Eat shareholders will be successful, even if it represents a premium of 20% over yesterday’s closing price. The offer values Just Eat at £4.9-billion.

The first problem is that Prosus seemed to be a bit late to the party. Takeaway.com and Just Eat announced their proposed transaction at the beginning of August and have already published a schedule of events to finalise it.

Both Takeaway.com and Just Eat have scheduled shareholder meetings to seek ratification of the transaction on 4 December, with final implementation early 2020.

The second and more telling problem is that Prosus seemed to have missed that the Takeaway.com and Just Eat transaction constitutes a reverse takeover of Takeaway.com by the smaller Just Eat.

While both parties describe the transaction as a merger, it is telling that Just Eat is the profitable party, and that Takeaway.com will change its name to Just Eat.

Thus far, the directors of Just Eat have elected to go it alone and grow their business together with Takeaway.com rather than settle for a smaller role as a division within Prosus.

At this stage, anything can happen. It seems unlikely that Prosus will succeed in buying Just Eat outright. The most likely scenario is that it will pick up a significant stake in the new Just Eat and look to grow its shareholding with some joint ventures at operational level.