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Just Eat announces Takeaway.com merger

Investors welcomed news of a tie-up, but concerns over margins remain
July 29, 2019

Just Eat (JE.) has announced a proposed merger with Takeaway.com, sending shares in the food delivery platform up by around a quarter.

IC TIP: Hold at 809p

The scale rationale for the deal is clear, creating a combined group with 360m in total orders in 2018 versus 221m for Just Eat alone. The share price rose to exceed 809p following the announcement, despite the terms of the combination implying a value of 731p per share for Just Eat.

Activist investor Cat Rock has been advocating for Just Eat to merge with a rival since February, arguing it could make the group “dramatically more formidable as it competes to secure its marker position against Uber, Deliveroo and others”. Cat Rock founder and managing partner, Alex Captain - who welcomed the news - even named Takeaway.com in a letter to Just Eat’s board. 

However, broker Peel Hunt argued that regardless of the merger, Just Eat’s push into delivery will erode margins as rival Uber Eats opens up to restaurants that provide their own delivery services, bolstering its own profitability.