25 Nov 2019 07:00
Just Eat plc
25 November 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. IN PARTICULAR, THIS ANNOUNCEMENT SHOULD NOT BE RELEASED, PUBLISHED, DISTRIBUTED, FORWARDED OR TRANSMITTED, IN WHOLE OR IN PART, IN, INTO OR FROM ANY RESTRICTED JURISDICTION, INCLUDING THE UNITED STATES.
FOR IMMEDIATE RELEASE
Just Eat plc ("Just Eat")
Publication of Response Circular
The Board of Just Eat (the "Board") announces that it is today publishing its response circular (the "Response Circular") in connection with the unsolicited cash offer to acquire the entire issued and to be issued share capital of Just Eat for 710 pence per share (the "Prosus Offer").
The Board continues to believe that the Prosus Offer significantly undervalues Just Eat both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com (the "Takeaway.com Combination"). A letter from the Chairman of Just Eat to Just Eat shareholders, as set out in the Response Circular, has been extracted below.
Letter from the Chairman of Just Eat to Just Eat shareholders
Dear Shareholder
Thank you for taking the time to read this document. It contains information which we believe is of great significance to you. As you know, on 22 October 2019 Prosus announced an offer for Just Eat of 710 pence per share in cash. It is your Board's view that this significantly undervalues Just Eat both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com. This document explains why.
710 pence represents an implied premium and multiple of revenue well below market benchmarks
The Prosus Offer of 710 pence per share is 20% lower than Just Eat's all-time high share price of 890 pence and 13% lower than the highest share price over the last six months of 812 pence. Furthermore, the premium that Prosus is offering to Just Eat's share price before the announcement of the Takeaway.com Combination is just 12%. By comparison, cash offers for FTSE 350 UK public companies since 2016 have on average been at a significantly higher premium.
Prosus is only offering 4.8x Just Eat's 2019 revenue. This is significantly lower than the average multiples of comparable transactions in the online food delivery sector, most notably the multiple that Naspers, who are a 74% shareholder in Prosus, paid for its investment in Delivery Hero, in September 2017.
Just Eat has leading market positions in a rapidly expanding sector with massive headroom
Your company today operates in a massive and growing addressable market estimated to be worth up to £476 billion in 2019, with ongoing material structural growth underpinned by increasing penetration of online food delivery and restaurant availability.
We are the market leader for online food delivery in eight of our thirteen markets, with a market share of more than double our nearest competitor in our largest, most attractive markets in the UK, Canada and Brazil.
Our industry is young and its growth potential is enormous. With further investment, our hard won market positions will deliver significant upside to you over the long term.
We have built a unique hybrid model with world-class capabilities which has delivered proven results
We believe the winning model in online food delivery will be the one which gives consumers the broadest choice and the best experience. Having established a leading and profitable marketplace business, we are successfully building a meaningful and highly complementary delivery offering for those restaurants - including global quick service restaurant chains ("QSRs") - who do not have their own delivery capability. This has driven the creation of our leading hybrid marketplace model that is best placed to win.
Delivery represented more than 25% of our orders and 38% of our revenue in the first half of 2019, and we have established partnerships with many of the world's largest QSRs across multiple markets.
Our market-leading consumer brand recognition has been complemented by over £500 million of investment in the development and acquisition of technology and software enabled platforms since 2016.
Just Eat has a long-term track record of value creation for its shareholders. Since our IPO in 2014, our total shareholder return of 190% compares to 38% total shareholder return for the FTSE 350. Since 2014, we have delivered average annual revenue growth rate of approximately 50%, increased active customers by 246% and expanded the number of restaurants by 145%. We have achieved this against a backdrop of a dynamic food delivery industry that has experienced massive consumer change, and seen our competitors benefit from significant investment from third parties.
We have a clear winning strategy which we will accelerate through increased investment
As we have previously mentioned to you, the early results of our strategic execution in building a winning hybrid marketplace model are strong, with notable progress in the UK and Australia building from our successful and profitable delivery model in Canada. Our continued success gives us the confidence to continue to invest at pace and we have a number of growth levers and strategic initiatives available which will accelerate revenue growth across our markets.
These initiatives include supply expansion and a broader delivery footprint, reinforcing customer value and accelerating growth in our customer base, enhancing our customer experience, and diversifying our proposition through new restaurant services and adjacent market opportunities. Whilst these initiatives might, depending on their nature and timing, impact on our profitability in the future, we believe it is important to continue to invest to drive the significant long-term value creation opportunity that is available to us and our shareholders.
We believe that these strategic initiatives will capitalise on the strengths of our unique hybrid marketplace model and will serve to: (a) further develop or grow our market positions; (b) offer consumers the broadest choice across meal occasions thereby enhancing our customer growth and retention, order frequency and delivery economics at scale; and (c) drive long-term revenue and profit growth.
The Takeaway.com Combination is based on a compelling strategic rationale that allows you to participate in the upside potential of the enlarged group
On 5 August 2019, your Board announced the recommended all-share combination with Takeaway.com. As set out in further detail at the time your Board recognises that the Takeaway.com Combination represents an opportunity to create one of the leading online food delivery companies in the world with scale, strategic vision, industry-leading capabilities, leading positions in attractive markets and a diversified geographic presence.
The Takeaway.com Combination creates the second largest food delivery player globally and the largest outside China and it will be the market leader in 15 of the 23 countries where it operates. This scale will further drive Just Eat's ability to invest and innovate, share know-how and best practices across markets.
The Takeaway.com Combination gives you exposure to the Netherlands and Germany, two high-quality markets which will further drive profitability and financial strength. Access to these profit pools will provide a deep pocket of capital and further flexibility to make strategic, long-term investment decisions in a fast-moving sector, underpinned by the operating leverage of the Takeaway.com Combination. They will also provide synergy potential and the scope for longer term platform consolidation.
Furthermore, the Takeaway.com Combination provides access to a proven founder-led management team, led by Jitse Groen, which has achieved significant success in our sector.
The Takeaway.com Combination enhances your business and provides you with the opportunity to remain invested through a premium listing in London with FTSE UK index inclusion and benefit from significant future upside. Your Board believes that the Takeaway.com Combination provides Just Eat shareholders with greater value creation than the Prosus Offer of 710 pence per share and that the Prosus Offer significantly undervalues Just Eat on a standalone basis.
You should take no action in relation to the Prosus Offer of 710 pence per share
Your Board, which has been so advised by Goldman Sachs, Oakley Advisory and UBS as to the financial terms of the Prosus Offer, firmly believes that the Prosus Offer of 710 pence per share in cash significantly undervalues your company and that you should reject it and neither accept through CREST nor return any Prosus Form of Acceptance. In providing their financial advice to the Directors, Goldman Sachs, Oakley Advisory and UBS have taken into account the Directors' commercial assessments.
Accordingly, the Board unanimously recommends that you should take no action in relation to the Prosus Offer of 710 pence per share in cash. Instead, the Board unanimously recommends that you accept the Takeaway.com Offer, either through CREST or complete and return your Takeaway.com Form of Acceptance for the Takeaway.com Combination.
The Directors who have beneficial holdings of Just Eat shares have irrevocably undertaken to accept or procure acceptance of the Takeaway.com Offer in respect of their beneficial holdings totalling 660,476 Just Eat shares (representing approximately 0.10 per cent. of Just Eat's issued share capital on the Latest Practicable Date).
We will write to you again during the course of the Prosus Offer to keep you informed of any developments. In the meantime, if you have accepted the Prosus Offer, you should be aware that if the Prosus Offer has not become or been declared unconditional as to acceptances by 1pm on 1 January 2020 you can withdraw your acceptance of the
Prosus Offer.
Yours faithfully
Mike Evans
Chairman of Just Eat
In accordance with the requirements of Rule 25.1(b) of the City Code on Takeovers and Mergers (the "City Code"), a copy of the Response Circular will shortly be made available on www.justeatplc.com. A copy of the Response Circular has been submitted to the National Storage Mechanism and will shortly be made available for inspection at www.morningstar.co.uk/uk/NSM/.
Enquiries
Just Eat +44 (0) 20 3667 6948
Chris Dyett, Natalia Dyett, Investor Relations
Jo de Koning, Ellen Freeth, Corporate Communications press@just-eat.com
Goldman Sachs International (Financial adviser and corporate broker to Just Eat)
Anthony Gutman +44 (0) 20 7774 1000
Nick Harper
Clif Marriott
Duncan Stewart
Oakley Advisory (Financial adviser to Just Eat) +44 (0) 20 7766 6900
Christian Maher
Marc Jones
Max Gilbert
UBS (Financial adviser and corporate broker to Just Eat) +44 (0) 20 7567 8000
Rahul Luthra
Craig Calvert
Sandip Dhillon
Christian Lesueur
Brunswick Group LLP +44 (0) 20 7404 5959
Sarah West
David Litterick
Matt Brown
Further Information
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Just Eat and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Just Eat for providing the protections afforded to clients of Goldman Sachs International, or for providing advice in connection with the matters referred to in this announcement.
Oakley Advisory, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Just Eat and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Just Eat for providing the protections afforded to clients of Oakley Advisory, or for providing advice in connection with the matters referred to in this announcement.
UBS AG London Branch ("UBS") is authorised and regulated by the Financial Market Supervisory Authority in Switzerland. It is authorised by the Prudential Regulation Authority and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority in the United Kingdom. UBS is acting as financial adviser to Just Eat and no one else in connection with the matters set out in this Announcement. In connection with such matters, UBS, its affiliates, and its or their respective directors, officers, employees and agents will not regard any person other than Just Eat as their client, nor will they be responsible to any other person for providing the protections afforded to their clients or for providing advice in relation to the contents of this Announcement or any other matter referred to herein.
Publication of this announcement
A copy of this announcement and the Response Circular will be available, subject to certain restrictions relating to persons located or resident in the Restricted Jurisdictions, on Just Eat's website at www.justeatplc.com, by no later than 12 noon (London time) on the business day following the date of this announcement. The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.
Important notice
This announcement is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.
Overseas Shareholders
The release, publication or distribution of this announcement in certain jurisdictions, including the United States, may be restricted by law ("Restricted Jurisdictions"). Persons who are not located or resident in the United Kingdom or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable requirements.
Unless otherwise determined by Takeaway.com or required by the City Code, and permitted by applicable law and regulation, the Takeaway.com Offer will not be made, directly or indirectly, in, into or from the United States or any other Restricted Jurisdiction where to do so would violate the laws of that jurisdiction, and the Takeaway.com Offer will not be capable of acceptance from or within the United States or any other Restricted Jurisdiction where to do so would violate the laws of that jurisdiction. Accordingly, copies of this announcement and all documents relating to the Takeaway.com Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from the United States or any other Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Takeaway.com Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Takeaway.com Offer.
The availability of the Takeaway.com Offer and the Prosus Offer to Just Eat Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.
This announcement is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration. There will be no public offering of these securities in the United States.
Securities to be issued pursuant to the Takeaway.com Offer have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "US Securities Act") and may not be offered, sold or resold except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act. Such securities will only be made available in the United States to qualified institutional buyers (as defined in Rule 144A under the US Securities Act) or accredited investors (as defined in Rule 501(a) under the US Securities Act) in transactions that are exempt from the registration requirements of the US Securities Act. Such shareholders will be required to make such acknowledgements and representations to, and agreements with, Takeaway.com as Takeaway.com may require to establish that they are entitled to receive such securities. A person who receives securities pursuant to the Takeaway.com Offer may not resell such securities without registration under the US Securities Act or without an applicable exemption from registration or in a transaction not subject to registration (including a transaction that satisfies the applicable requirements of Regulation S under the US Securities Act).
Securities to be issued pursuant to the Takeaway.com Offer have not been, and will not be, registered or qualified under the securities laws of any state or jurisdiction in the United States and, accordingly, will only be issued to the extent that exemptions from the registration or qualification requirements of state "blue sky" securities laws are available or such registration or qualification requirements have been complied with.
For purposes of the US Securities Exchange Act of 1934, as amended (the "US Exchange Act"), it is intended that the Takeaway.com Offer will be made pursuant to Section 14(e) and Regulation 14E under the US Exchange Act benefitting from exemptions available to "Tier II" tender offers. Accordingly, the Takeaway.com Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that may be different from those applicable under US domestic tender offer procedures and law, and certain rules applicable to tender offers made into the United States, including rules promulgated under Section 14(d) of the US Exchange Act, do not apply. In accordance with normal UK market practice and Rule 14e-5 under the US Exchange Act, Takeaway.com, certain affiliated companies and its nominees, or its brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, Just Eat Shares, other than pursuant to the Takeaway.com Offer, before or during the period in which the Takeaway.com Offer remains open for acceptance. If such purchases or arrangements were to be made they would be made outside the United States either in the open market at prevailing prices or in private transactions at negotiated prices and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the United Kingdom.
The receipt of consideration by a US holder for the transfer of its Just Eat Shares pursuant to the Takeaway.com Offer or the Prosus Offer may be a taxable transaction for United States federal income tax purposes and under applicable United States state and local, as well as non-US and other, tax laws. Each Just Eat Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Takeaway.com Offer and Prosus Offer applicable to them, including under applicable United States federal, state and local, as well as non-US and other, tax laws.
Dealing Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Takeover Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.