Just Eat shareholder writes scathing letter about takeover

Cat Rock Capital Management, a long-term oriented investment firm and beneficial owner of approximately 17.7 million shares of the common stock of Just Eat representing circa 3% of Just Eat’s outstanding shares, today sent an open letter to Just Eat shareholders.  Cat Rock Capital urges Just Eat shareholders to accept the Takeaway.com offer and reject the Prosus NV (“Prosus”) offer, consistent with the unanimous recommendation of the Just Eat Board.

Alex Captain, Founder and Managing Partner, Cat Rock Capital Management LP, commented:

“While we are pleased that Prosus has bid for Just Eat, we are deeply disappointed with both the level of their offer and their approach to the bidding process.

“Instead of offering a fair price for Just Eat, Prosus has made a number of claims about Just Eat and Takeaway.com aimed at convincing shareholders not to support their merger.

“Today we published an open letter assessing the credibility of the Prosus claims. We hope that Just Eat shareholders find this open letter helpful as they decide on a course of action.

“As we have said previously, the Prosus offer of 710p per share is not remotely close to our assessment of fair value for Just Eat. We think a Prosus bid needs to be at least 5.0x 2020 consensus revenue, or 925p per share, in order to compete with a Takeaway.com merger that we believe could comfortably be worth 1,200p per share by the end of 2020.

“Moreover, we believe there is a significant risk that Prosus will reduce the acceptance threshold of its offer to 50% and one share. If this occurs, Just Eat shareholders who choose not to accept the Prosus offer will be faced with the prospect of becoming minority shareholders in a publicly-traded entity with majority Prosus ownership. Therefore with a 50% threshold, Just Eat shareholders could feel compelled to accept a Prosus bid that is substantially below fair value, particularly if merger arbitrage funds continue to increase their ownership of Just Eat stock.

“We urge other Just Eat shareholders to join us in accepting the Takeaway.com offer that the Just Eat Board has unanimously recommended.”