Prosus’s online food fight heats up
Takeaway.com CEO dismisses rival’s view on merger target
● Takeaway.com, locked in a battle with Prosus to acquire Just Eat, has accused its rival of trying to talk down the value of the UK online food delivery service.
At stake is a transaction that would give the winner significant scale in the online food business, and equip it to better withstand an onslaught from the likes of Uber Eats.
Jitse Groen, CEO of Takeaway.com, told Business Times this week Prosus was exaggerating the size of the investment needed in Just Eat. “They are just trying to talk down the value.”
Groen himself orders in about three or four times a week and, like Prosus, he believes that choosing ready-made food online is a fast-growing market with plenty of lucrative opportunities.
Takeaway.com has its roots in a Dutch business called Thuisbezorgd, founded by Groen in 2000, but has since expanded to nine other European countries and Israel. Just Eat would be a good fit as it is the market leader in the UK and 11 other markets.
Groen’s company had been wooing Just Eat’s board for a while and went public in August with a merger proposal that would give shareholders a stake in a combined company to be called Just Eat Takeaway.com.
But Prosus last month launched a hostile takeover bid, offering Just Eat shareholders £4.9bn (about R94bn) in cash — a premium of about 20% on Takeaway.com’s proposal.
Central to Prosus’s argument is the idea that Just Eat desperately needs to expand its own-delivery part of the business and that it would require significant investment to do so.
“Own delivery” means having a network of couriers to pick food up from restaurants and deliver it to customers.
Groen says Takeaway.com and Prosus have different approaches to online food delivery.
Both believe in a so-called hybrid model but Takeaway.com leans more towards being a marketplace, while Prosus is bullish on own delivery.
Both Takeaway.com and Just Eat are predominantly marketplace companies, he says, which means that restaurants mostly handle delivery themselves.
“That is by far the superior business model,” Groen adds.
It is very difficult to compete on the logistical side, he says, while acknowledging that there is a case to be made for some own delivery to give customers exposure to more restaurants that do not go the last mile.
“But that is an add-on to an already very profitable business.”
Prosus this week fired another salvo when it published its offer document, reducing the level of acceptances required from Just Eat shareholders to 75%.
CFO Basil Sgourdos told reporters that a lack of investment in product, technology, marketing and own-delivery capabilities has allowed competitors such as Deliveroo and Uber Eats to steal significant market share from Just Eat.
Naspers owns 74% of Prosus, a portfolio of consumer-facing internet businesses it listed on Amsterdam’s Euronext exchange in September.
Alongside online payments and e-classifieds, food delivery is a business segment the company aims to grow rapidly. Prosus already has stakes in Brazil’s iFood, Europe’s Delivery Hero and India’s Swiggy.
Adding spice to the deal
But by the time Prosus came knocking, Just Eat’s board had already given its blessing to Takeaway.com’s proposal and urged shareholders to take that deal.
Groen says he was surprised to see Prosus jump in with an offer so soon after listing, a move he calls “very atypical behaviour” for a company like Naspers.
Takeaway.com last week tweaked its offer to give Just Eat shareholders more certainty of a deal. It changed its approach from a scheme of arrangement, which leaves the process more in Just Eat’s hands, to an offer, which gives Takeaway.com itself more control.
It also gives Takeaway.com the right to lower the threshold for accepting the deal to a simple majority, a much easier hurdle to cross than the scheme of arrangement, which required the nod of no less than 75% of Just Eat’s shareholders.
Groen shrugs off Prosus’s suggestion that for Just Eat to compete, it is vital to invest heavily in own delivery, saying that Takeaway.com has been quite effective in bettering its competitors.
He calls Takeaway.com “a very powerful company” in its own right, and dismisses Prosus’s claims that it alone has the deep pockets required.
He has thoughts around what needs to change at Just Eat, but he is not sharing them at this stage.
“We do believe it is a great asset.”
They’re just trying to talk down the value of Just Eat Jitse Groen Takeaway.com CEO