Just Eat-Takeaway.com $6 Billion Deal May Order Up an M&A Spree

(Bloomberg) --

The boards of Just Eat Plc and Takeaway.com NV agreed on terms of an all-share 5 billion-pound ($6 billion) combination that pits two food-delivery incumbents against a clutch of well-backed startups.

The new company, Just Eat Takeaway.com NV, is betting that its combined experience in turning a profit will help convince shareholders that it can fight off sizable rival startups that may also join forces.

"There is only a limited number of listed companies and ample funding for private companies," said Takeaway.com Chief Executive Officer Jitse Groen in a call with reporters. "However, it is a logical way forward that the companies that are going to be the biggest will acquire further businesses."

The food-delivery industry in Europe has become a battleground, with rivals competing on price and copying one another's business models. Joining forces with Takeaway.com will mark something of an escape for Just Eat, which has stuttered in the face of pressure from rivals and an activist shareholder. Once the dominant player in the food-delivery market in the U.K., its shares have fallen amid growing competition from Uber Eats and Deliveroo, and the company is without a permanent CEO after the departure of Peter Plumb in January.

The two boards have agreed on the deal, first revealed in late July, according to a statement Monday. Just Eat Shareholders will own 52.15% of the combined entity, and Takeaway.com holders will have 47.85%.

Groen and Evans

Groen, who has a fortune of about $1.4 billion, according to the Bloomberg Billionaires Index, will be the CEO of the combined company. Mike Evans, currently the chairman of Just Eat, will assume the same role for the combined group, according to the statement.

The new company will remain headquartered in Amsterdam, but with a premium listing on the London Stock Exchange, and will expect to de-list from the Netherlands. There are no specific plans to shift or reduce the workforce in Just Eat's main U.K. offices, the statement added.

Just Eat Takeaway has no plans to divest businesses following the merger, Evans said on the call, adding that the deal is the "beginning of long-term consolidation in our sector."

The food-delivery market in Europe has been marked by rival business models and aggressive entrants. Just Eat was founded in 2001 in Denmark before moving to the U.K., while Takeaway.com was founded in 1999. In comparison, Deliveroo and Uber Eats -- the two main rivals in Europe, which have received millions in funding -- were founded in 2013 and 2014 respectively. Other rivals such as Glovo and Delivery Hero SE also compete in different regions.

Diverging Fortunes

While Just Eat has been stagnating, Takeaway.com has expanded following a surging share price. In December it agreed to buy Delivery Hero's German operations for about $1 billion, ending an expensive rivalry in a country where both were competing for market share at the cost of profitability.

The U.K. will be a major market for Just Eat Takeaway.com, and is also one of most competitive. Uber Eats and Deliveroo have invested heavily in the country, and have expanded from the logistics of delivery -- getting the food from the restaurant to your door -- to launching rival marketplace platforms that concentrate on aggregating available eateries for users.

Expectations of a counterbid to Takeaway.com have waned, leaving rival bids to likely come between existing rivals. Delivery Hero CEO Niklas Oestberg last week poured cold water on speculation his company may approach Just Eat, saying it has plenty of growth potential through expanding its offering to challenge Amazon.com Inc. in local shipments.

Amazon also has a stake in Deliveroo, a deal that is under review by U.K. regulators, and one that is widely seen as a move by the U.S. tech giant to better understand the food delivery market after it shut down its own food-delivery business in the U.K. in late 2018.

Just Eat Takeaway.com expects to create recurring annual pretax cost benefits of approximately 20 million euros by the fourth anniversary of the completion of the deal, with around 10 million euros expected a year after the deal closes, the statement said.

To contact the reporter on this story: Giles Turner in London at gturner35@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Paul Sillitoe

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