Prosus and Takeaway in holiday season bidding war

Prosus and Takeaway in holiday season bidding war

On 22 October 2019, Prosus N.V. made a hostile cash offer for the entire issued and to be issued share capital of Just Eat plc.  The bid was rejected by Just Eat on the grounds that it significantly undervalued the company, with the board recommending that shareholders accept the competing offer made by Takeaway.com N.V., which had been agreed on 5 August.

Following its initial bid, on 9 December Prosus revised the terms of its offer and increased its cash offer to 740 pence per share, valuing the company at approximately £5.1 billion.  The increased offer document included a statement that Prosus had reduced the level of acceptances required to satisfy the increased offer to 50% plus one share and extended the closing date of the increased offer till 27 December 2019.

The increased bid has sparked a tug of war between Takeaway.com and Prosus, with each bidder claiming that the other party’s statements were misleading and unsatisfactory. Takeaway.com’s chief executive officer, Jitse Groen described the increased offer as a ‘derisory cash bid’. Prosus responded to Takeaway’s investor circular, emphasizing that Takeaway.com’s claims were ‘implausible’ and ‘unsubstantiated’.

On 11 December 2019, Prosus published an investor presentation where it developed the arguments set out in its offer document, highlighting the fact that the ‘increased offer of 740 pence per share in cash comes at a 44% illustrative premium assuming the 15% premium on announcement of the Takeaway.com offer in July remained embedded in Just Eat's share price of 589 pence as at 21 October 2019 (implying an illustrative unaffected price for Just Eat of 512 pence adjusted for this 15% premium)’.

Despite the increased cash offer, the board of Just Eat unanimously rejected the bid and held that the increased offer ‘significantly undervalues Just Eat and its attractive assets and prospects both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com’. Its share price closed at 783 pence per share on 11 December 2019, leaving room for both parties to put forward a higher bid.

If the competing bids are not resolved, the Takeover Panel may intervene to resolve the matter via an auction process as it did in 2018 with the competing offers from Comcast and 21st Century Fox for Sky plc.  

 

The Market Tracker team will monitor and report on further developments.

 

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