Just Eat takeover battle hots up with fresh $6.5 bln Prosus bid

[December 09, 2019]  By Toby Sterling and Paul Sandle

AMSTERDAM (Reuters) - Prosus <PRX.AS> raised its unsolicited cash offer for British food delivery service Just Eat <JE.L> to $6.5 billion on Monday, ratcheting up the pressure on rival bidder Takeaway <TKWY.AS> in their bitter takeover battle.

The Dutch-based technology group's new cash offer of 740 pence per share, up from 710 pence, is about 5% higher than Takeaway's all-share bid, which has the backing of Just Eat.

"Unlike the Takeaway.com offer, which relies on (its) shares remaining at an above-sector multiple, our cash offer provides certainty of value to Just Eat shareholders," CEO Bob van Dijk said in a statement.

Prosus also lowered its acceptance threshold to 50% plus one share, down from 75%, and extended its offer period to Dec. 27. It said the new offer is about 25% above the level where Just Eat shares were trading before its first bid in October.

Just Eat said its board was reviewing the latest Prosus offer. "Shareholders are advised to take no action with regards to the increased offer at this time," it said.

Just Eat shares were trading at 781 pence at 1122 GMT, signaling market expectations of a higher bid.

Takeaway's CEO, Jitse Groen, described the new Prosus offer as "derisory", noting that it was 9% lower than Just Eat's share price as recently as Aug. 13.

He urged Just Eat shareholders to accept his offer, which he said would "combine our two great companies to create the largest global platform in online food delivery outside China".

'DERISORY'

"A slightly higher derisory cash bid remains a derisory cash bid," Groen said.

"This opportunistic offer significantly undervalues Just Eat and the value that the Just Eat-Takeaway.com combination will deliver to shareholders."
 

Signage for Just Eat on the window of a restaurant in London, Britain, August 5, 2019. REUTERS/Toby Melville

Investor Cat Rock, which Refinitiv data shows owns 5.9% of Takeaway and 2.6% of Just Eat, said Prosus should pay at least 925 pence per share for Just Eat to compensate investors for the upside they might miss in a Takeaway tie-up, which it supports.

"This revised Prosus offer is wholly inadequate and shows Just Eat shareholders that Prosus cannot muster a credible bid," the investor said.

Cat Rock has argued that Just Eat would thrive under Groen's leadership and that shares of the new entity could reach as high as 12 pounds.

Both sides are due to report on how many shares their offers have won by Dec. 12. If neither has emerged as winner, Britain's Takeover Panel will start an auction process from Dec. 27.

Citi analysts said they believe that an auction is the preferred outcome for Prosus, which has the cash to win, adding that Prosus is unlikely to reach the required acceptance level with its bid at 740p per share.

Prosus has given itself capacity to increase its offer during an auction process, Citi said in a note, highlighting that the latest approach was not declared as its "best and final" offer.

Citi estimated that 830p per share "would be a level at which we believe would fairly reward Just Eat shareholders".

(Reporting by Toby Sterling; Editing by Alexander Smith and David Goodman)

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