Just Eat share price drops as rights issue disappoints

Just Eat Plc (LON:JE) today announced the results of the Placing and Open Offer for £445 million worth of newly issued equity, revealing that only 41.33 percent of the new shares were sold, bringing in £185.1 million.

The London-based company was still ‘delighted’ with the results of the issuance, the proceeds of which will be used towards financing the proposed £445 million acquisition of Australia’s Menulog.
Just Eat’s share price dipped 2.03 percent to 415.70p as of 09:05 BST today.
The firm’s stock has dropped more than six percent since the details of the new equity offer were announced on May 21.
The slide meant that the price at which the newly issued shares were offered, 425p, exceeded the actual share price, diminishing the immediate appeal of the issue.
In particular, the valuation of Menulog, at 371 times its annual earnings, produced a negative reaction from investors. Just Eat’s stock has dropped more than fifteen percent since the deal was announced on May 8.
Since the disappointing uptake Just Eat has not elaborated on how it will make up the shortfall to fund the Menulog deal, which is expected to be completed by June 15.
The FTSE 250-listed company said that Menulog is growing rapidly, with 96 percent year-on-year order growth for the three months to March.
“Since the time of our IPO last year, we have consistently stated that participating in a disciplined manner in industry consolidation was an important strategic objective for JUST EAT,” chief executive David Buttress commented back in May. “The acquisition of Menulog, a business with strong leadership in an attractive and fast-growing market, is fully consistent with this approach and will be an important addition to the JUST EAT business.”
As of 10:10 BST, Tuesday, 09 June, Just Eat PLC share price is 417.00p.