Cat Rock Points Way Towards Just Eat Merger With Takeaway.com
An activist investor has urged online food delivery firm Just Eat to pursue merger talks with a peer such as Takeaway.com, saying it does not trust the board to get the appointment of a new CEO right.
Cat Rock Capital, which has stakes in both Just Eat and Dutch-listed Takeaway.com, said Just Eat was likely to attract significant interest from potential partners if it chose to seek a deal as a route to strong management and growth.
In a letter to the Just Eat board, it cited Takeaway.com CEO Jitse Groen as saying that the UK was one of the best markets in Europe and that he intended to be active in consolidation.
The letter said there was a clear rationale for Just Eat to combine with a peer.
"A merger could make Just Eat dramatically more formidable as it competes to secure its market position against Uber, Deliveroo and others," the letter said.
Cat Rock's statement comes only three weeks after Just Eat CEO Peter Plumb left the company in the wake of criticism from Cat Rock and some other shareholders about his plan to grow earnings.
Peter Duffy, who joined Just East as chief customer officer last June, has been appointed as interim CEO but Cat Rock said he too lacked relevant experience in the food delivery industry.
Just Eat made no direct comment on the criticisms.
"We take communications with all our shareholders extremely seriously. As announced previously, we are carrying out a thorough CEO appointment process and we will update the market as appropriate," a Just Eat spokesman said in an e-mail.
Plumb's strategy demanded increased investment, causing earnings growth to slow sharply, and Cat Rock, founded by Alex Captain, has complained the company had become the world's worst performing online food delivery stock.
"Cat Rock argues that a merger with a well-run industry peer would be a far better outcome for shareholders than relying on the board to choose a new CEO, particularly given the board's poor record of CEO selection," said Connecticut-based Cat Rock which has a stake of around 1.9% in Just Eat.
Just Eat is currently valued at around £4.9 billion, while Takeway.com, in which Cat Rock owns a 4.9% stake, has a market value of around €2.5 billion.
A potential merger would come at a time of consolidation in the market, with Germany's Delivery Hero selling a Swiss business to Takeaway.com last June and its operations in Germany to the same firm in December.
"The letter was sent outside our knowledge. We don't have any comments with regard to the content of it," a Takeaway.com spokesperson said.
Cat Rock also said in December that Just Eat, which delivers meals from local takeaways as well as big brands such as Burger King, KFC and Subway, should consider selling businesses such as its stake in Brazilian market leader iFood.
Just Eat's stock shed a quarter of its value in 2018, after enjoying rapid expansion since its 2014 float at a price of 260 pence per share. The slump forced it out of London's bluechip index in December.
Delivery Hero declined to comment when asked if it would be interested in teaming up with Just Eat.