Investor Cat Rock points way towards Just Eat merger with Takeaway.com
* Cat Rock says Just Eat would attract strategic interest
* Cat Rock says Takeaway.com CEO intends to consolidate
* Criticises Just Eat record on executive appointments
(Adds Just Eat comment, Delivery Hero declined to comment,
By Karina Dsouza and Noor Zainab Hussain
Feb 11 (Reuters) - An activist investor urged online food
delivery firm Just Eat to pursue merger talks with a peer
such as Takeaway.com, saying on Monday it did not
trust the board to get the appointment of a new CEO right.
Cat Rock Capital, which has stakes in both Just Eat and
Dutch-listed Takeaway.com, said Just Eat was likely to attract
significant interest from potential partners if it chose to seek
a deal as a route to strong management and growth.
In a letter to the Just Eat board, it cited Takeaway.com CEO
Jitse Groen as saying that the UK was one of the best markets in
Europe and that he intended to be active in consolidation.
The letter said there was a clear rationale for Just Eat to
combine with a peer.
"A merger could make Just Eat dramatically more formidable
as it competes to secure its market position against Uber,
Deliveroo and others," the letter said http://pdf.reuters.com/htmlnews/htmlnews.asp.
Cat Rock's statement comes only three weeks after Just Eat
CEO Peter Plumb left the company in the wake of criticism from
Cat Rock and some other shareholders about his plan to grow
Peter Duffy, who joined Just East as chief customer officer
last June, has been appointed as interim CEO but Cat Rock said
he too lacked relevant experience in the food delivery industry.
Just Eat made no direct comment on the criticisms.
"We take communications with all our shareholders extremely
seriously. As announced previously, we are carrying out a
thorough CEO appointment process and we will update the market
as appropriate," a Just Eat spokesman said in an email.
Plumb's strategy demanded increased investment, causing
earnings growth to slow sharply, and Cat Rock, founded by Alex
Captain, has complained the company had become the world's worst
performing online food delivery stock.
"Cat Rock argues that a merger with a well-run industry peer
would be a far better outcome for shareholders than relying on
the board to choose a new CEO, particularly given the board's
poor record of CEO selection," said Connecticut-based Cat Rock
which has a stake of around 1.9 percent in Just Eat.
Shares in Just Eat rose 1.9 percent to 717 pence in London
by 1130 GMT, valuing the company at around 4.9 billion pounds
Takeway.com, in which Cat Rock owns a 4.9 percent stake, has
a market value of around 2.5 billion euros ($2.8 billion).
A potential merger would come at a time of consolidation in
the market, with Germany's Delivery Hero selling a
Swiss business to Takeaway.com last June and its operations in
Germany to the same firm in December.
"The letter was sent outside our knowledge. We don't have
any comments with regard to the content of it," a Takeaway.com
Cat Rock also said in December that Just Eat, which delivers
meals from local takeaways as well as big brands such as Burger
King, KFC and Subway, should consider selling businesses such as
its stake in Brazilian market leader iFood.
Just Eat's stock shed a quarter of its value in 2018, after
enjoying rapid expansion since its 2014 float at a price of 260
pence per share. The slump forced it out of London's bluechip
index in December.
Delivery Hero declined to comment when asked if it would be
interested in teaming up with Just Eat.
($1 = 0.8839 euros)
($1 = 0.7751 pounds)
(Reporting by Karina Dsouza and Noor Zainab Hussain in
Additional reporting by Paul Sandle in London, Samantha Machado
in Bengaluru and Nadine Schimroszik in Berlin:
Editing by Rashmi Aich and Keith Weir)
First Published: 2019-02-11 07:27:02
Updated 2019-02-11 14:07:02
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