Just Eat rejects the raised €6 billion takeover offer from Prosus

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Updated on Mar 11, 2020
Reading time 3 minutes
  • Just Eat rejects the raised takeover offer from Prosus on Tuesday morning.
  • The €6 billion offer proposed 740 pence a share for Just Eat's shareholders.
  • Just Eat signed a merger with Takeaway.com in July giving the rival 52.2% stake in the company.
  • The board expressed confidence in the potential for higher profits following the merger.
  • Just Eat has performed fairly well in the stock market in 2019 so far.

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The
Dutch-based technology company, Prosus, had recently announced a takeover offer
for British online food order and delivery service, Just Eat. Following rejection
on the first offer, the tech group had raised its bid on Monday. As of Tuesday
morning, however, Just Eat has announced that it has rejected the raised offer
as well. The company cited undervaluation as the reason for rejection.

Prosus
Offered 740 Pence A Share In Its Raised Offer

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Prosus
is an international internet assets division of South Africa’s Naspers. The
company had offered 710 pence a share to Just Eat in its previous bid. As of
Monday, the bid was reported to have been raised to 740 pence a share.

Just
Eat spokesperson highlighted that increased offer from the tech group was 5%
lower than the stock price on Friday. In July when Just
Eat signed a merger with Takeaway.com
that introduced the world to one of
the largest online food delivery services across the globe, the share prices
were reported at 635.6 pence per share. Compared to this price, Prosus’ offer was
merely 16% higher.

As
per the terms and agreements of the merger, Just Eat shareholders were promised
0.0974 shares of Takeaway.com for every Just Eat share that they held. Takeaway.com,
in return, was given a 52.2% stake in the company.

It
was further added that Prosus’ raised offer of 6 billion euros didn’t take into
account the first-mover advantage, the prospect of upside for the shareholders
following the merger with the rival Takeaway.com, and the quality of business at
large.

The
Board Sees A Potential For Higher Profits Following The Merger With
Takeaway.com

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The
board unanimously addressed
Just Eat’s shareholders
and said that it is in their best interest to
reject the 740 pence per share offer from Prosus. The board also sought their
confidence in the strategic rationale behind the merger with Takeaway.com and
expressed confidence in the potential for higher profits in the long run.   

Just
Eat has performed fairly well in the stock market in 2019. Having started the year
at around 587 GBX, the company printed a year-to-date high of 812 GBX in
August. As of Friday, share prices were seen settling around the yearly high
and were reported trading around 786 GBX. The stock closed the last week at 781
GBX. Analysts of the stock market have also highlighted that the stock has
mostly traded above the opening level in 2019, except for June, when it briefly
touched the level again. Just Eat currently has a market cap of $5.34 billion
and a price to earnings ratio of 134.91.

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