(Alliance News) - Takeaway.com NV on Monday responded to Prosus NV's increased cash offer for takeaway food ordering platform Just Eat PLC, claiming the raised offer is still a "derisory".
Takeaway.com Chief Executive Jitse Groen commented: "A slightly higher derisory cash bid remains a derisory cash bid."
Prosus, earlier on Monday, increased its offer for London-listed Just Eat to 740 pence per share in cash, giving Just Eat a value of GBP5.1 billion.
For its part, Just Eat said on Monday it is reviewing the new Prosus offer and is advising shareholders to hold off on accepting it for now.
The all-cash offer represents a 26% premium to Just Eat's closing price on October 21, the day before Prosus's first bid for the company. But Takeaway noted it is only a 16% premium to when Takeaway made own offer for Just Eat in July, saying this is "derisory as a cash exit price".
Takeaway urged Just Eat shareholders to support its own "superior" all-share offer.
Takeaway.com and Just Eat agreed to a merger in July, under which Just Eat shareholders would get 0.09744 of a Takeaway.com share for each Just Eat share held, implying a value for Just Eat at 731 pence per share.
Following this, internet and media firm Prosus, which was recently spun-off from South African media giant Naspers Ltd, launched a 710p per share, or GBP4.9 billion, cash bid for Just Eat back in October. That offer was rejected.
Prosus and Takeaway have been engaged in a war of words since Prosus stepped in, as they battle it out to acquire Just Eat.
"The revised Prosus offer of 740p remains derisory as a cash exit price," Takeaway.com's Groen said on Monday. "It represents a premium of only 16% to Just Eat's undisturbed share price of 636p on July 26. This is materially lower than the median premium paid for precedent offers for UK companies over the last 10 years of 40%, and a discount of 9% to Just Eat's recent high share price of 812 pence on August 13."
He continued: "This opportunistic offer significantly undervalues Just Eat and the value that the Just Eat Takeaway.com combination will deliver to shareholders. Under the Takeaway.com offer, if the combined group's shares were valued at Takeaway.com's average trading multiple since its IPO in 2016, Just Eat's shares would be illustratively worth about GBP11 each."
He urged Just Eat shareholders to ignore the Prosus offer and to accept Takeaway.com's "far superior" bid.
Earlier Monday, Prosus Chief Executive Bob van Dijk said: "Following the announcement of our offer, we have had the opportunity to listen to the views of Just Eat shareholders, share our perspective on the global food delivery sector and reflect on the unquestionable challenges Just Eat faces, as clearly seen in its third quarter results. We have also had extensive discussions with our own shareholders with regards to our long-term strategy for food delivery and Just Eat's role within that."
Prosus believes Just Eat is an "attractive business with strong long-term potential" but is facing "significant challenges".
"Just Eat's historically strong market positions are being eroded by intensifying competition in the UK and other core markets, including Spain and Italy, with market share loss recently accelerating in a number of markets," Prosus added.
Prosus believes Just Eat has "underinvested" in addressing these problems. The company also believes the Takeaway.com offer "carries significant risk" and Takeaway.com "takes a narrow view of the food delivery sector".
Also on Monday, Prosus said it has lowered the required level of acceptances for its ofer to 50%, and extended the closing date to accept the offer to December 27.
Prosus's Van Dijk added: "We continue to believe in the sector and, as we have demonstrated in Brazil, if you act decisively and invest effectively in technology as well as the opportunities of own-delivery, then you can build an attractive growth business that is equipped to win in the long-term. We believe the investment required is substantial and this impacts our view of potential returns. As disciplined investors we obviously need to factor the required investment into our value considerations."
Before issuing a response to Prosus's new increased offer, Takeaway.com issued a circular to Just Eat shareholders for its own offer.
"Together, we have the opportunity to combine two fantastic companies with huge growth potential. Our Takeaway.com offer provides you with the opportunity to benefit from significant long-term value creation from the Just Eat Takeaway.com combination. We encourage you to join us on our journey and accept the Takeaway.com offer without delay," said Takeaway.com Founder & Chief Executive Jitse Groen.
Shares in Prosus were up 0.5% in Johannesburg on Monday at ZAR970.70 each. Naspers was marginally lower at ZAR2,054.11. Just Eat was up 0.4% in London at 780.40 pence, giving it a 5.33 billion market capitalisation.
By Paul McGowan; paulmcgowan@alliancenews.com
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