Online delivery platform Just Eat (JE.) is facing demands from US activist shareholder Cat Rock Capital to pursue a merger with a ‘well-run industry peer’ rather than appoint its own choice of chief executive.
In an open letter, Cat Rock, which owns 13 million shares in Just Eat, says it wants the firm to avoid making the same ‘serious mistakes’ that led to Peter Plumb’s appointment.
Plumb retired as chief executive in January after less than 18 months in the role.
His departure may be linked to a previous open letter from Cat Rock criticising the Board for failing to introduce appropriate financial goals or holding management accountable via remuneration packages.
Peter Duffy is taking over the chief executive officer role temporarily but may take on the position on a permanent basis, a move which Cat Rock opposes due to his lack of relevant experience.
‘The Board continues to appoint executives with no online food delivery experience to critical roles at the company,’ comments Cat Rock founder Alex Captain.
According to Cat Rock, Just Eat has rejected offers of assistance to find a suitable replacement for Plumb including two candidates with ‘extensive’ online food delivery experience.
Captain argues that Just Eat’s ‘misguided approach’ led to it replacing the co-founder of the firm’s Canadian business SkipTheDishes, Chris Simair, with Movember Foundation ex-chief marketing officer Kevin Edwards.
WHY IS CAT ROCK RECOMMENDING A MERGER?
Captain says that while Plumb was at the helm he ‘eviscerated’ Just Eat’s management ranks.
‘During his tenure, Just Eat lost chief operating officer Adrian Blair, chief marketing officer Barnaby Dawe, chief people officer Lisa Hillier, and concerningly, co-founder of SkipTheDishes Chris Simair,’ comments Captain.
Cat Rock now believes that the best way forward is to pursue a merger to acquire experienced management rather than relying on the board to appoint the right people.
A merger would also make the company ‘dramatically more formidable’ against the likes of Uber Eats and Deliveroo, argues the US shareholder.
‘We therefore urge the Just Eat Board to swiftly initiate good-faith merger discussions with industry peers with the aim of completing a transaction in the next few months,’ says Captain.
Cat Rock warns that if shareholder feedback is ignored and a potential merger is not seriously explored, it will take further action ahead of Just Eat’s annual general meeting on 1 May.
Shares in Just Eat are up 1.7% at 715.8p.