September 3, 2019 / 7:22 AM / 18 days ago

Just Eat shareholder Eminence Capital to vote against Takeaway.com merger

LONDON (Reuters) - A top-10 shareholder in Just Eat (JE.L) said on Tuesday it would vote against the British food delivery company’s proposed 9 billion pound ($11 billion) merger with Takeaway.com (TKWY.AS), saying the deal undervalued Just Eat.

FILE PHOTO: Signage for Just Eat is seen on the window of a restaurant in London, Britain, August 5, 2019. REUTERS/Toby Melville/File Photo

Eminence Capital, a U.S. asset management firm which owns 4.4% of Just Eat, said the merger had a sound strategic rationale but the financial terms of the deal were “grossly inadequate to Just Eat shareholders.”

Last month Amsterdam-based Takeaway.com and rival Just Eat finalised the terms of a deal, first outlined in July, to create a global food delivery company to rival Uber Eats (UBER.N) as the largest outside China.

The group, to be called Just Eat Takeaway.com, would be a market leader in Britain, Germany, the Netherlands and Canada.

Investment firm Cat Rock, however, said on Tuesday Just Eat shareholders should vote for the merger unless a more “compelling and credible” counter-offer emerges.

"Voting against the Just Eat and Takeaway.com merger benefits no one but Just Eat's competitors," Cat Rock said in a statement here+Rock+Capital+Press+Release+on+Just+Eat+plc+9-3-19+vFinal.pdf. The activist investor owns 3% of Just Eat’s shares and a 4.3% stake in Takeaway.com, according to Refinitiv Eikon data.

Cat Rock had been pushing Just Eat to merge with a rival such as Takeaway and has also stepped up its campaign for changes at the company.

The merger deal would see Just Eat shareholders receive 0.09744 new Takeaway.com shares for each of their shares. When it was announced on Aug. 5 it valued Just Eat at around 4.7 billion pounds ($5.8 billion).

However, as of Monday’s closing prices, Just Eat’s market capitalization was 5.33 billion pounds.

“It is clear to us that (Takeaway.com’s) offer of a 15% premium to (Just Eat’s) closing price on July 26 is highly opportunistic,” said Ricky Sandler, chief executive and chief investment officer of Eminence.

“The proposed financial terms are far too favorable to (Takeaway.com) shareholders and far too unfavorable to (Just Eat) shareholders. Accordingly, we intend to vote against this arrangement,” he said.

The merger deal, which is being carried out through a so-called scheme of arrangement, requires the support of 75% of Just Eat shareholders to go through.

Just Eat had no immediate comment. Its shares were 3.3% lower at 750.2 pence at 1306 GMT.

Last month Aberdeen Standard Investments, Just Eat’s sixth-biggest investor with a 5.1% stake, according to Refinitiv data, also said the deal did not value the British company highly enough and it expected an improved offer to emerge.

Reporting by James Davey in London and additional reporting by Noor Zainab Hussain in Bengaluru; Editing by Susan Fenton and Mark Potter

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