Shareholder Cat Rock to Just Eat: Seek tie-up

LONDON/GENEVA: Just Eat Plc should merge with a rival online meal-delivery company because the board has shown that it can’t find a suitable chief executive officer, according to Cat Rock Capital Management LP, which owns about 2% of Just Eat.

The Greenwich, Connecticutbased investment firm sent an open letter to Just Eat’s board of directors saying it made a mistake in appointing Peter Plumb as CEO in 2017.

Just Eat should use global consolidation to its advantage and a merger would deliver “real value,” according to Cat Rock.

“You basically have a situation where you can get a world-class CEO and delivery capabilities, while also potentially securing a premium valuation for shareholders,” Alex Captain, founder of Cat Rock, said in a phone interview.

“We are very focused on ensuring the board engages in discussions to secure this outcome for shareholders,” he added.

“The company takes communications with all of its shareholders ‘extremely seriously,’” a spokesman for Just Eat said, adding that “it’s carrying out a thorough CEO appointment process and we will update the market as appropriate.”

Plumb stepped down last month, and Cat Rock said Just Eat has ignored two suggestions of potential replacements who have experience in online food delivery.

“Any new CEO will face the daunting task of rebuilding Just Eat’s entire management team while simultaneously attempting to execute on the company’s marketplace and delivery initiatives,” Cat Rock said in the letter.

“It is therefore increasingly clear that a merger would be the best way for Just Eat to secure the management talent and delivery expertise it needs to compete.”

Consolidation has been heating up in the food delivery sector. Takeaway.com NV agreed to acquire the German businesses of Delivery Hero SE for approximately €930 million ($1 billion) in December, while Uber Technologies Inc’s bid for Roofoods Ltd’s Deliveroo stalled over a disagreement on valuation, the Financial Times reported in November.

Takeaway.com and Delivery Hero have market values of about €3 billion and €6.5 billion respectively. Other industry players include GrubHub Inc, Meituan Dianping, Uber Eats, DoorDash Inc, Postmates Inc and Deliveroo, according to Cat Rock.

“Not all of those are going to be legitimate industry peers for Just Eat to negotiate with, but we do think that there are multiple logical suitors,’’ Captain said.

Cat Rock estimates that iFood and SkipTheDishes could be worth more than £2 billion ($2.6 billion), while Just Eat’s core European business has significant upside.