Naspers-owned Prosus has sweetened its all-cash-offer for food platform and delivery firm Just Eat (JE.) by 4% to 740p (710p), valuing the firm at £5.1bn, while at the same time reducing the threshold required to a simple majority from 75%.
Just Eat shares traded at 782p, roughly 6% above the offer, implying shareholders are holding-out for more.
BIRD IN THE HAND
In effect, Prosus is saying that its improved offer provides a more certain and clean exit for shareholders while the Takeaway.com all-share offer, currently worth 710p, is subject to the variability of the Dutch firm’s share price.
It also means that if shareholders accept Takeaway.com’s offer, in theory they get to share in whatever incremental value the combined group will create over the next few years.
But that is not a certainty and as Prosus chief executive Bob van Dijk said, ‘we believe the investment required is substantial and this impacts our view of potential returns. As disciplined investors we obviously need to factor the required investment into our value considerations.’
Takeaway.com released a circular today and in it argues that, ‘if the Combined Group’s shares were valued at Takeaway.com’s average trading multiple since its initial public offering (IPO) in 2016, Just Eat’s shares would be illustratively worth around £11 each.’
The assumptions that the Dutch company applies to arrive at such an impressive number are ‘punchy’ and requires the combined group’s enterprise value to earnings before tax, interest, depreciation and amortisation (EBITDA) to trade at 8.3 times. Just Eat currently trades at around six times EBITDA.
The fact that Prosus’ revised offer is above the original recommended Takeaway.com 730p offer means that the ball in now in firmly in the Dutch firm’s court.
