It’s still feels slightly odd that Just Eat, which only recently seemed to be a smartphone app plus a few blokes on mopeds, is a FTSE 100 company. But it’s time to acknowledge modern munching habits. Just Eat is now the target of two takeover bids, the latest being £4.9bn in hard cash. That definitely makes it a grown-up business.
The gatecrashing bidder is Prosus, the Amsterdam-listed offshoot of South African giant Naspers, and it must start as a favourite to prevail. A cash bid normally beats an all-share offer, which is all that is being pitched by Takeaway.com, also out of the Netherlands. As the saying doesn’t quite go, a pizza in the hand is worth two in the oven.
Yet one suspects this scrap has a long way to run. For now, Just Eat’s board is sticking with the Takeaway offer, even though it’s worth only 594p a share versus 710p from Prosus. Its official line is that Just Eat is “a strategic asset” and shareholders should contemplate the long-term winnings that could accrue from a combination with Takeaway.
That argument isn’t entirely optimistic. For investors who truly believe half the western world will soon be eating its dinner out of disposable boxes, it would make sense to hang around for the ride. Under the Takeaway terms, Just Eat investors would own 52% of a combined entity that would still be listed in London; and Jitse Groen, Takeaway’s founder and reputed whizz of the sector, would be in charge. It’s a plausible future.
Yet Just Eat’s loyalty to its first suitor is surely open to revision at any moment. The current stance looks more like an invitation to both bidders to raise their offers. It’s unclear if Takeaway could go to, say, an ownership split of 60:40, but it will now have to think about it.
As for Prosus, it can definitely go higher. It is a €108bn investment beast with eyes on global domination in food delivery. It already knows Just Eat via a partnership in Latin America and, if it really intends to throw capital at the sector to squash the growing threats from Deliveroo and Uber Eats, this is its moment.
Sit back and await an entertaining showdown. We haven’t see the real bids yet. More than likely, someone will end up overpaying.
SoftBank has a hard road ahead at WeWork
Adam Neumann must be a genius after all. He’s getting $1.7bn (£1.3bn) to stay away from the financial chaos he created at WeWork, which is one hell of a going-away present. The arrangement even includes a $185m “consultancy” fee, which is presumably window dressing for agreeing to surrender the super-charged voting rights that were a governance outrage in the first place.
Naturally $1.7bn, which may net down to closer to $1bn by the time Neumann has cleared his debts across Wall Street, is a small fraction of what the co-founder’s stake would have been worth had WeWork managed to get itself listed in New York. Plan A imagined the shared office company being valued at $47bn-plus. Under the terms of bailout from SoftBank, that figure has shrunk to $8bn.
Still, from Neumann’s point of view, he’s emerged as a billionaire from a business that lost $1.6bn last year, has an unproven business model and was rapidly running out of cash. It’s not a bad return for him.
He has Masayoshi Son, founder of SoftBank, to thank. One can only assume the Japanese outfit is bailing out WeWork because it would be even more embarrassing not to. Softbank had already invested $10bn, so had to be seen to try to recover its mistake.
It is possible, of course, that WeWork, after some brutal cost-cutting and a re-modelling of the business plan, could emerge eventually as a conventional property group, minus Neumann’s nonsense about “elevating the world’s consciousness”. On day one, though, SoftBank’s willingness to carry on looks more like an exercise in postponing pain.
Son and SoftBank still, apparently, hope to raise $100bn for another “Vision” investment fund to make big bets on businesses of tomorrow. Really? After this? There’s no accounting for the risk appetites of some sovereign wealth funds but the WeWork debacle ought to be enough to kill thoughts of Vision 2.
Wall Street investors spotted WeWork’s overblown claims and terrible governance as soon as it read the IPO prospectus. SoftBank had the inside track for years and still threw cash at the company. That’s more than a mere blemish on the investment record.