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Just Eat rejects revised Prosus offer

By Frank Prenesti

Date: Tuesday 10 Dec 2019

LONDON (ShareCast) - (Sharecast News) - Online food takeaway service Just Eat on Tuesday rejected a revised 740p-a-rival share offer from Prosus, saying it "significantly" undervalued the company.
Prosus is competing for control of Just Eat with Dutch rival Takeaway.com, which agreed a £4.8bn merger that would create one of the world's biggest online food delivery companies.

The Amsterdam-listed offshoot of South African technology group Naspers made a 710p a share cash offer in October and last week raised the stakes in the takeover battle.

Just Eat said the increased Prosus offer was only 16% higher than its share price of 635.6 pence in July before merger talks with Takeaway.com and 5% lower than its share price on Friday.

"Just Eat ... continues to believe that the Prosus offer fails to reflect appropriately the quality of Just Eat and its attractive assets and prospects, the benefits of first mover advantage in a consolidating sector, and, on the basis of its own analysis, the future upside available to Just Eat shareholders through remaining invested in Just Eat and the Takeaway.com combination," the company said in a statement.

Analysts at Liberum rated the stock a 'buy', and expected a further improvement in the offer as they did not believe that "Prosus will stop its pursuit of Just Eat".

"We view Just Eat as an attractive, and more importantly unique asset in regards to its market leadership in the jurisdictions in which it operates. Thus we believe following shareholder rejection of the latest bid, Prosus will respond with an improved offer," Liberum said in a note.

"We remain sceptical as to whether this bid will reach the required 50% shareholder threshold to be accepted and would expect a further improved bid to emerge, given Just Eat's scale and dominance in the jurisdictions in which it operates. We also maintain our view that the all-share merger will not pass."

"The proposed merger terms of 0.09774 Takeaway.com shares for 1 Just Eat share currently values Just Eat at 697p a share a 10% discount to yesterdays closing price. Given this and expressed negative sentiment from Eminence Capital and Aberdeen Standard, we see the proposed merger unlikely to be accepted, and would expect an improvement in the terms of the deal to follow to attract Just Eat shareholders ."

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