Hedge Fund Eminence Capital Plans to Derail £9 Billion Just Eat Merger
Over the course of the past few years, food delivery has become one of the biggest tech businesses in the world, and new food delivery applications are being launched all over the world at a breakneck pace. In this regard, the United Kingdom is one of the biggest markets in the world, and one of the biggest operators in the space is Just Eat. However, when it comes to growing consistently in this sector, companies often have to go for mergers and acquisitions in order to consolidate their position. In the same vein, Just Eat reached an agreement with Takeaway.com and the entire deal is valued at £9 billion at this point in time.
The whole thing is going to go up for a vote from shareholders and one of the ten biggest shareholders in Just Eat has stated that it is going to vote against the merger. The shareholder in question is the hedge fund Eminence Capital and it has criticized the offer made by Takeaway.com as being opportunistic. In addition to that, Eminence Capital has also stated that Just Eat has also been significantly undervalued and naturally, it is not possible for the hedge fund to vote for the deal. The deal is going to be completed entirely in stock, and the aim is to create a company that could be big enough to take on rivals like Deliveroo and UberEats among others.
According to the terms of the deal, Takeaway has effectively offered Just Eat 731p per share. However, that is merely a 15% premium on the price of the stock from around the time when the news of the merger first emerged. Since then, the Just Eat share has traded at a higher value, and hence, Eminence Capital believes that the offer has undervalued Just Eat. The Chief Executive and Chief Investment Officer of Eminence, Ricky Sandler spoke about the deal and stated that such undervaluation is ‘unprecedented’. He said,
We believe that a valuation disparity of this degree is unprecedented in similar transactions over the past decade.
That being said, it is important to note that Just Eat is a target for some of the other major players in the industry like DoorDash and Naspers among others. Considering the fact that the voting does not take place until October, there is perhaps enough time for an improved offer to come in from one of those companies.