Prosus sweetens bid to break up Just Eat's Takeaway.com merger plans but it needs more to win the order
Prosus is offering certainty over potential but there's not enough of it on the table as things stand
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Your support makes all the difference.Just Eat shareholders have been offered a little sugar to take away by the Dutch outfit trying to break up the company’s planned all share merger with rival Takeaway.com.
Prosus, which is controlled by tech outfit Naspers, one of Africa’s biggest companies, has raised its offer to £5.1bn, or a 740p a share, from an opening salvo of £4.9bn (710p).
It represents a premium of 26 per cent to where the shares were at before the company launched its attempt to muscle in on the agreed deal at the end of October.
If Just East were on your investment menu today, you’d have to shell out 780p on the open market. Bear that in mind.
The Takeaway deal has the support of some powerful investors, notably Cat Rock Capital, a top ten shareholder which has said it would require a fat tip indeed to agree to Prosus’ offer, having mentioned the figure of 925p.
On the table for it, and other Takeaway backers, is a stake in what would be a powerful company, with a reduced cost base and a savvy CEO in Jitse Groen, who knows his onions from his guacamole. Nonetheless it is operating in a competitive market. The rise of the likes of Uber Eats and Deliveroo has reshaped that market and the challenges the merged outfit faces are considerable.
Prosus hasn’t been shy when it comes to highlighting them. But it faces the problem that all hostile bidders face. By doing that it raises a question with Just Eat’s investors: How come you want it so much then? Is there something you're seeing that we’re missing?
On the other hand, even though it’s by no means clear how Prosus will go about making Just Eat fly higher than Takeaway could, it is dangling cold hard cash in front of sharholders' noses, the prospect of “certainty” at a modest premium.
Importantly Prosus has also tweaked the structure of its proposal, which had previously required 75 per cent support but now needs only 50 per cent.
Institutional investors have typically valued the short term bung over longer term potential, especially when delivery of it carries a risk, as it surely does with Takeaway’s all share deal.
Shareholders have until Christmas to decide. Prosus may have created a few more waverers, but the market says more is required and it’s probably right about that. If Prosus is serious, it needs to put a little extra in the stocking to get this over the line.
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