Arash Massoudi of the Financial Times believes Prosus may have to stump up even more money for Just Eat.
Its current offer of £4.9bn is substantially more than the £4bn the firm was worth yesterday — but may not be enough!
Indeed, Just Eat point out that Prosus’s offer is only 11.7% higher than Just Eat’s “undisturbed price of 635.6 pence on 26 July 2019” — the day before the merger with Takeaway.com was announced.
Typically, a successful takeover offer would come with a juicier premium.
Just Eat rejects takeover offer
BREAKING: Just Eat has rejected the £4.9bn all-cash offer from Prosus.
In a statement to the City, it claims that Prosus’s proposal “significantly undervalues Just Eat and its attractive assets”, and its prospects on a standalone basis and through a merger with Takeaway.com.
As such, it is giving a thumbs down, telling investors:
Accordingly, the Board of Just Eat unanimously recommends that shareholders reject the Prosus Offer.
Instead, it is still recommending the Takeaway.com offer.
Just Eat also reveals that Prosus has previously offered to pay 670p per share, and 700p, before then making its 710p-per-share proposal. All three offers were rejected.
Just Eat also denies that it hasn’t been constructive, pointing out that it has provided Prosus with some financial information to help it:
The Board of Just Eat has engaged fully with Prosus throughout this process, including providing access to Just Eat management and due diligence information in accordance with its obligations under the Code and with the intention of providing Prosus with sufficient information to put forward an attractive and compelling valuation of Just Eat.
Prosus has not provided such a valuation and proposal to the Board of Just Eat.
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Prosus CEO: Just Eat won’t engage constructively with us
Prosus’s CEO Bob van Dijk is discussing the offer now.
He says that Just Eat’s shareholders will appreciate the “merits” of Prosus’s proposal (including its offer of cash, rather than shares in Takeaway.com).
Van Dijk says he hopes to discuss the offer with Just Eat’s board:
We presented this idea to the Board of Just Eat, in good faith, but we have been unable to engage constructively in what we see as a compelling proposition for Just Eat shareholders.
He reveals that Prosus has made “indicative offers” to Just Eat’s board in the past, but without success — forcing it to go public with its offer today.
Van Dijk also claims that his bid isn’t “hostile” — even though Prosus is trying to crash the Takeaway.com merger….
This £4.9bn takeover comes only a day after Just Eat disappointed investors with its latest financial results.
Just Eat’s revenue growth slowed to 25% in the third quarter of this year, down from 30% in the first half. Although still pacy, this created anxiety that it is losing market share to rivals.
This prompted Deutsche Bank and JP Morgan to both cut their target prices for Just Eat’s shares this morning, to 670p and 708p respectively. That looked perfectly sensible, until this morning’s bid landed, sending them up to 730p.
Prosus is also pledging ‘substantial investment’ to help Just Eat grow its own delivery arm.
It says:
Based on Prosus’s global experience and having met Just Eat management and reviewed the information provided, Prosus believes that the business will require substantial investment, in excess of that planned by Just Eat management.
Just Eat’s success was built on an ordering website that linked restaurants with customers but didn’t handle deliveries itself. But it has recently branched out into deliveries too, responding to competition from Uber Eats and Deliveroo.
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Prosus is hoping that its offer to pay cash for Just Eat shares will persuade investors to reject the all-share merger with Takeaway.com.
It points out that shares in the sector have slid since the summer:
Since the start of the Offer Period the High Growth Internet Sector and Online Food Delivery Sector have fallen 16.9 per cent. and 15.0 per cent. respectively
Against this backdrop, continued market volatility and macro-economic uncertainty, the Prosus Offer provides Just Eat Shareholders the certainty of an all-cash Offer.
Takeover battle for takeaway firm Just Eat
Breaking: A tasty takeover battle has just broken out for Just Eat, the food delivery firm.
Global investment group Prosus has just launched a £4.9bn all-cash offer for the FTSE 100-listed company, sending its shares up by almost a quarter.
It’s an attempt to snaffle Just Eat from under the nose of Takeaway.com, the Dutch giant which tabled its own takeover bid back in July. That bid was expected to create one of the world’s largest online food delivery firms….but is now obviously in doubt.
Prosus (which is part of South Africa’s Naspers, a tech investing giant), says it hasn’t managed to reach an agreement with Just Eat, so is going direct to shareholders.
Prosus has recently approached the board of directors of Just Eat with a number of indicative proposals to acquire Just Eat. Prosus and the Just Eat board have not managed to reach agreement.
Consequently, Prosus is making this announcement in order to give Just Eat Shareholders the opportunity to consider the Offer.
Prosus’s offer is worth 710p in cash per share.
Shares in Just Eat have rocketed by 24%, to 731p — as the City anticipates that Takeaway.com may fight back with a new higher bid of its own.
More to follow….
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International investors and business leaders may not be impressed by the latest Brexit developments, fears David Miller, investment director of Quilter Cheviot.
He worries that the sight of Boris Johnson’s government trying to ram the Brexit agreement through parliament in just three days could hurt the UK’s reputation.
Miller says:
“Order, counter order and confusion remain the order of the day.
The sight of government ministers tiptoeing through the minefield of constitutional convention, let alone the law, is unedifying and one that does little to enhance the reputation of the UK as a safe place to do business. The vote on the Withdrawal Agreement Bill will be watched closely by markets who are waiting to see whether Boris Johnson’s will win out in the days preceding the 31st October deadline.
UK hotel industry suffering since Brexit
Julie Palmer, partner at Begbies Traynor, says Whitbread isn’t the only hotel operator suffering from Brexit.
“Our Q3 Red Flag Alert data shows Whitbread isn’t alone, with a 29% increase in significant financial distress in the hotels & accommodation sector since the EU referendum in 2016.
“As demand for accommodation continues to fall and tourism is impacted by Brexit, holding on to its significant slice of the hospitality pie will be challenging.
The pound is starting to dip, and is now down 0.15% today at $1.2940.
It came under pressure after opposition leader Jeremy Corbyn tweeted that Labour opposes the government’s “sell-out” Brexit deal, and will push for a second referendum.
Plumbing and heating deal frozen by Brexit.
Anxiety over Brexit has forced Travis Perkins, the UK builders’ merchants, to halt the sale of its plumbing and heating business.
Travis Perkins is blaming “the current unprecedented level of uncertainty”, which has forced it to pause the sale process of the P&H business “for the time being”.
City firm Liberum thought the sale could raise £400m-£500m. But it appears potential buyers have been reluctant to commit.
CEO Nick Roberts has added that trading conditions becoming “incrementally more challenging through the course of the summer as a result of the on-going market uncertainty”.
That explains why many business groups are very unhappy about the prospect of a further Brexit delay, as it prolongs the economic uncertainty.
Pendragon, the UK car dealer, continues to be shunted by Brexit uncertainty.
The company, which runs the Evans Halshaw and Stratstone franchises, has reported an 8% fall in total sales for the last three months. Revenue from used car sales tumbled by 16.7%.
Pendragon, which is closing 22 of its 34 Car Store branches, says the public are reluctant to splash out on a new or second-hand car until they know how Brexit is resolved.
It told the City:
Whilst the improved performance during the period is encouraging, we continue to expect economic and market conditions to be challenging, with the ongoing uncertainty around Brexit impacting consumer confidence.
The full-year underlying loss before tax remains in line with the Board’s expectations.
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Whitbread: Political and economic uncertainty are hurting
There’s clear evidence this morning that the clouds of Brexit uncertainty are hurting UK companies.
Whitbread, which owns the Premier Inn hotel chain, has just reported an 8% slump in profits for the last six months.
Like-for-like “accommodation” sales declined by 3.6%, which it blames on “continued weak regional market conditions”. In simple terms: people are booking fewer hotels rooms, which suggests they’re cutting back on holiday trips and business visits.
Whitbread says market conditions are challenging — with business confidence remaining weak and leisure confidence in decline, in the face of “heightened political and economic uncertainty”. Brexit, in other words.
Some 80% of Premier Inns are located outside London. Alison Brittain, Whitbread CEO, says business beyond the capital is particularly challenging:
Shorter-term trading conditions in the UK regional market have been difficult, particularly in the business segment where we have a higher proportion of our revenue, whilst trading in London remained strong.
Brittain also warned shareholders that “the near-term market conditions in the UK remain uncertain”. No-one would argue about that, given the crucial votes taking place in parliament tonight.
Introduction: Pound back below $1.30 ahead of crunch Brexit votes
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a crucial week for the future of the UK economy.
This evening, parliament will vote on whether they agree with the broad principle of Boris Johnson’s Brexit bill – as the government begins a wild dash to get the UK out of the EU by the end of the month.
MPs only saw the 110-page document last night (!) so it’s not clear how many will support it.
Even if the Second Reading is passed, the Commons could reject the whistle-stop programme to have the Brexit deal approved by Thursday night. That would derail Johnson’s plans, and make an extension beyond 31 October likely.
It’s also possible that Labour could amend the deal in the coming days, by attaching a commitment to a customs union. That could also scupper Johnson’s ambitions of leaving the EU in 9 days time.
The pound is holding up fairly well in the face of this uncertainty. It’s trading around $1.2970 this morning, having hit $1.30 for the first time since May on Monday. Sterling has rallied by over 5% in the last two weeks, hitting a series of five-month highs.
That’s because the City has come to the view that a disorderly Brexit is unlikely — Johnson will probably get his deal through eventually, although a general election may be needed first.
Mark Haefele of UBS Global Wealth Management predicts the pound will remain jittery.
Short term focus will now be passing Johnson’s deal. On balance, we think that the legislation will not be passed in time for an end of October departure, forcing an extension. We expect the EU will accept this extension rather than face a no-deal, although their decision may not be immediate.
Following the large moves in sterling over the last two weeks, we will likely see further volatility in the days ahead as the next phase of Brexit unfolds.”
Also coming up today
The latest UK public finance figures are expected to show that Britain borrowed £9.7bn to balance the books in September, up from £6.4bn in August.
The CBI’s monthly survey of UK industry is likely to show that manufacturers are still anxious about economic conditions.
And MPs on the Business committee will take a break from Brexit to quiz Thomas Cook’s auditors about the financial problems that brought down the world’s oldest holiday company last month.
The agenda
- 9.15am: BEIS committee inquiry into Thomas Cook collapse
- 9.30am BST: UK public finances for September
- 11am BST: CBI survey of UK industrial trends
- 7pm BST: Vote on Second reading on the Withdrawal Agreement Bill
- 7.15pm BST: Vote on Programme Motion for Withdrawal Agreement Bill
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