A third major shareholder in food delivery platform Just Eat has said a £4.9 billion bid from investment vehicle Prosus “significantly undervalues the group”.
Aberdeen Standard Investments, which has a 5.2% stake in Just Eat, said to even consider any offer, Prosus – part of South Africa’s Naspers, must increase its offer by at least 20%.
However, the investor also warned that the Just Eat merger with Takeaway.com was causing some concern, with the latter struggling against competition.
Frederik Nassauer, investment director at Aberdeen Standard Investments said: “We believe Prosus’ current all-cash offer of 710p (a share) significantly undervalues the group, ascribing little value to the maturing yet highly cash-generative UK operation, the innovative and fast growing Canadian business, as well as Just Eat’s highly valuable iFood stake in Brazil.
“In our view, Prosus would need to raise their cash offer by at least 20% in order for it to be deemed attractive.”
He added that Delivery Hero – a rival to Takeaway.com – was eating into its rival’s business and pushing down the share price and investors were selling down their stakes.
“If the selling pressure continues in the coming weeks, we believe the currently proposed merger ratio (0.09744) will not be sufficiently attractive for Just Eat shareholders and hence might put the proposed merger at risk.”
The latest setback for Prosus comes a day after Just Eat’s biggest shareholder, SM Trust, and activist investor Cat Rock also said the bid undervalues the company
Cat Rock, a shareholder which has previously been a vocal critic of Just Eat’s leadership, argued that the delivery company needs to find a merger partner to succeed in the consolidating market.
Cat Rock said: “The Prosus offer underscores the significant long-term potential and strategic value of Just Eat’s business.
“However, unlike the Takeaway.com offer, the Prosus offer does not allow Just Eat shareholders to participate in any future value creation through the equity of the combined businesses.
“Prosus should share this future value creation with Just Eat shareholders by paying a fair premium.”