Just Eat shareholder calls for asset sales and new targets

Just Eat shareholder Cat Rock Capital Management LP on Monday called on management of the online food order and delivery company to sell businesses and align executive pay to financial targets.

The US hedge fund, which owns about 2 per cent of Just Eat, asked Just Eat to present a three-year financial plan before its shareholder meeting in May and consider selling its stake in online food delivery platform iFood.

Just Eat has grown rapidly since it floated in 2014 but its shares have slid more than 25 per cent this year amid repeated warnings that its expenses would increase, as it fights rivals Deliveroo and Uber Eats in markets ranging from Canada to Australia and the United Kingdom.

Selling its iFood stake could fetch as much as £650 million (€723 million), Cat Rock said.

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“We are concerned that the slow pace of planning and decision-making at Just Eat will not only continue to destroy shareholder value but will also result in competitors eroding Just Eat’s leading market position,” Cat Rock said.

Little accountability

Cat Rock holds about 13 million shares in Just Eat, or a 2 per cent stake. It has been steadily increasing its holding over the past two years, from about six million shares at the start of the year to 10 million at the end of the third quarter and 13 million now. The fund has held stakes in several British companies, including Rightmove, On the Beach and Softcat.

Cat Rock accused Peter Plumb, Just Eat's chief executive officer for just over a year, of creating targets that "have been remarkably undemanding and have created little accountability for management to execute".

Just Eat said it has a “clear strategy in place to deliver long-term sustainable value” for its shareholders.

The company last month forecast revenue towards the top end of its range, but warned that full-year core earnings would come in towards the lower end of forecasts due to higher-than-expected investment in Brazil and Mexico.

Analysts said then they backed the group’s strategy to keep investing as the market develops rapidly around the world, while investors send its shares up nearly 8 per cent on the day.

The FTSE 100 company, founded in Denmark in 2001 by five entrepreneurs, now operates in 12 markets with over 2,900 employees.

Just Eat’s share price has declined by a quarter to £5.77 this year and the company recently fell out of the FTSE 100 index of the UK’s largest companies by market capitalisation.

– Reuters/Financial Times Service