Just Eat has found itself at the centre of a feeding frenzy. Rival bidders Naspers and Takeaway.com are eyeing the food-ordering pioneer, in what has emerged as one of the hottest consumer-internet markets this year. And with activist investors in the mix, including one already alleging stock-price meddling, the stage is set for the most competitive takeover situation that the UK has seen since last year's shootout for Sky.
Less than three months ago, Just Eat investors believed that they had finally found stability after years of turmoil, intensifying competition and management changes. The London-based company had agreed a £9bn all-stock merger with Takeaway.com, which alongside Just Eat had pioneered online food ordering in Europe almost 20 years ago. Jitse Groen, Takeaway's founder and chief executive, would lead the combined group into a global battle with the likes of Uber, SoftBank-backed DoorDash and Amazon-backed Deliveroo.
It would have been a particularly satisfying outcome for Cat Rock, a New York-based hedge fund and investor in both companies that had been pushing for a deal for months.
Yet just across town from Takeaway's Amsterdam headquarters, another team with a long record in food delivery was weighing its options.
Naspers' international dealmaking unit, which owns stakes in India's Swiggy, Berlin-based Delivery Hero and Brazil's iFood as well as Tencent, last month completed a $100bn initial public offering, to become Europe's most valuable consumer internet group. Prosus, as Naspers' new spin-off is called, already collaborates with Just Eat in Brazil.
As Takeaway.com's share price sagged through September and October, Bob van Dijk, chief executive of Naspers and Prosus, saw an opportunity to add Just Eat to its international portfolio.
Naspers, Africa's most valuable company, has been willing to ramp up its investments in the market as other parts of its business, such as online classifieds, have shown greater profitability.
The company, which was transformed by its bet on Tencent into an internet group, is now chasing a vision of the world where preparing one's food at home may be as rare as making one's own clothes from scratch.
Just Eat would be "another significant milestone in our journey to build the world's leading food delivery business", Mr van Dijk told investors on Tuesday.
The combined group of Prosus investments would operate across 50 markets, holding the leading position in more than 40, Mr van Dijk said, capitalising on what he sees as a "large and underpenetrated" market.
"We will have a perspective on product and technology innovation across the sector that is unmatched," he added.
However, Just Eat's board was not won over by his pitch. It rebuffed three separate offers from Prosus before the investment group went hostile with its highest so far: a 710p all-cash offer valuing Just Eat at £4.9bn.
Assessing just how much of a premium that price represents will be a matter of fierce debate among Just Eat's investors, who seem hungry for more. For Prosus to succeed, it must also convince investors that taking its cash now is a safer bet than Takeaway's Mr Groen's pitch that he can create a European champion to rival Silicon Valley's giants.
While Prosus argues its bid is 20 per cent above what Takeaway's all-share offer is now worth, it is little more than 10 per cent above Just Eat's last closing price before the Takeaway.com talks were revealed in July.
SM Trust, Just Eat's largest investor with a 13 per cent stake, is among those pushing for a higher offer.
"As a long-term shareholder, SM Trust supports the position of the [Just Eat] board in rejecting the proposal and believes the offer significantly undervalues Just Eat and the strategic nature of its asset base," a spokesperson for the fund said.
Just Eat's shares closed at 736p, well above Prosus' offer, in a clear sign that investors believe a better offer will emerge.
Analysts at Barclays said that Prosus would need to raise its bid by between 5-12 per cent, to as much as 800p, to win Just Eat shareholders' approval and ensure it exceeds any potential counter-offer from Takeaway.com.
Already, Cat Rock has been vocal in its opposition to Prosus' move. In a bold statement on Tuesday, the activist investor alleged that Prosus' management team may have leaned on Delivery Hero, in which it is the largest investor, to "interfere" with the companies' share price.
Delivery Hero became a shareholder in Takeaway.com when the latter acquired its German business earlier this year. In early September, a month after the Just Eat deal had been agreed, Delivery Hero announced that it would sell 3m of the Takeaway.com shares that it had received at a price of no less than €73 per share. Takeaway.com's shares, which had been trading above €80 for most of the summer, lost 13 per cent of their value in the 10 trading days after Delivery Hero announced the planned stock sale.
"We note that Prosus owns approximately 22 per cent of Delivery Hero's outstanding stock and sits on the Delivery Hero board," Cat Rock said. "It is imperative that any entity related to Prosus, including Delivery Hero, immediately cease market actions that interfere with the effective value provided by competing bids for the duration of the offer period."
Prosus' Mr van Dijk has insisted that he was not involved in Delivery Hero's move.
When one analyst on Tuesday's investor call said it was "quite a stretch for me to see that this is not related in any way", Mr van Dijk responded: "We don't control them. What they do is what they do."
Other high-growth internet companies have also seen their values decline since the summer, he added.
Delivery Hero emphasised the company's independence from Prosus. "We do not comment on M&A activity in the sector that is not related to Delivery Hero," it said.
Next it will be Just Eat and Takeaway.com's turn to make their case as they embark on an investor roadshow to sell their deal. Ultimately, if a bidding war does break out, shareholders will have to choose between Mr Groen's two decades of experience and Prosus' promise that a new generation of delivery companies will triumph.
Additional reporting by Joseph Cotterill
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