Breakingviews: Just Eat satisfies hunger for takeaway Dutch CEO

Just Eat’s delivery driver has just arrived with a piping-hot treat: a takeover bid and a new chief executive. After more than six months without a boss, and under pressure from activist Cap Rock Capital, the UK food delivery group is selling itself to rival Takeaway.com in an all-share deal worth nearly 5 billion pounds. If the proposed deal outlined on Monday morning goes ahead, the Dutch group’s CEO Jitse Groen will be leading the fightback against Uber and Deliveroo.

Takeaway.com’s acquisition is the latest twist in the intense battle for control of food delivery in the United Kingdom. Early leader Just Eat is unusually profitable in a cash-burning industry. However, it faces an onslaught from Uber Eats, funded by deep-pocketed SoftBank, and Deliveroo, which recently received an investment from e-commerce giant Amazon. The latter is luring customers with a subscription service that offers unlimited deliveries for 8 pounds a month.

Just Eat used to rely on restaurants’ own drivers to deliver food orders, but is now trying to build its own network to match the slick logistics of its competitors. In March the company reported full-year earnings that implied the investment would drag underlying EBITDA margins to 19% this year, from 22% in 2018.

Takeaway.com is arriving just in time. Groen started his empire from his university residence 19 years ago, long before Uber Eats and Deliveroo hit the road. He oversaw the launch of the company’s own delivery network using electric bikes and scooters. Now he’s on an acquisition binge, having bought the German assets of rival Delivery Hero for 930 million euros last December. The 5.1 billion euro company enjoys healthy growth but is a lot less profitable than its target: its EBITDA margin this year is expected to be just 2%, data from Refinitiv shows.

Just Eat shareholders are getting a 15% takeover premium, based on closing share prices on Friday, and end up with slightly more than half the combined company. However, they will have to accept Takeaway.com’s inflated paper. The Dutch company trades at around 13 times expected revenue for this year, while the deal values Just Eat at less than 5 times.

That assumes the two sides actually manage to break bread. Just Eat shares soared almost 30% to 821 pence on Monday morning, well above the 765 pence implied by Takeway.com’s offer. That suggests another bidder may yet jump in. For now, Just Eat investors are licking their lips.

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