Just Eat Takeaway rejects calls for merger

Just Eat Takeaway. com's chief executive Jitse Groen admitted that the food delivery group has "quite a lot of work to do on communication", after facing criticism from one of its largest investors.

But Mr Groen rejected Cat Rock Capital’s suggestion that the company should divest assets or explore a merger with a larger rival.

“That is a solution that we don’t agree with,” he told reporters on Tuesday, noting that the food delivery company’s divisions in Canada, Australia and Latin America were “very profitable”.

“We don’t think it makes sense for a leading food-delivery business to sell leading businesses.”

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Mr Groen added: “We wouldn’t get into a conversation with a company that is very loss-making, that we don’t really understand how that company is ever going to be profitable – that’s not a good partner for us.”

Concerns

Cat Rock, which owns about 5 per cent of Just Eat Takeaway, last month launched an attack on the company's "broken communication" with investors and urged Groen to explore a merger with "other global players" such as DoorDash, Delivery Hero or Amazon in order to avoid a potential hostile takeover.

Other shareholders have echoed Cat Rock’s concerns. Boston-based hedge fund Baupost Group took a 3.5 per cent stake in Just Eat Takeaway this month.

Groen said criticism of the company’s communications around its plans to invest in logistics and groceries, as well as its explanations to the market of “what company we have become” after Takeaway.com’s mergers with Just Eat and Grubhub, were “fair comment”.

But he said that combining with a heavily loss-making rival would not make sense. “We have always been open to consolidation with companies that are similar,” Groen said of potential takeover offers. “If it’s good for the business, we’ll look at it. If it’s bad for the business, we won’t.”

Shares in Just Eat Takeaway were broadly flat on Tuesday morning, trading at £61.24 (€72) in London. Its rival Deliveroo, which closed at its 390p initial public offering price on Monday for the first time since the March listing, fell 1 per cent to 385p.

Mr Groen’s comments came as Europe’s largest food-delivery group, which acquired US-based Grubhub in June, reported like-for-like revenue growth for the combined entity of 52 per cent to €2.6 billion in the first six months of the year.

The company’s pretax loss jumped from €26 million in the first half of 2020 to €395 million in the same period this year, after it invested heavily in its own fleet of delivery couriers and expansion into groceries.

Consumers

Active consumers increased 21 per cent to 98 million, while gross transaction value rose 50 per cent to €14.1 billion in the first half. Orders rose 51 per cent to 547 million.

The group’s Canadian business, SkipTheDishes, recently launched its first “dark stores”, local warehouses from which couriers deliver grocery and convenience items. The model is similar to rapid-delivery services from Getir, GoPuff and their proliferating rivals, who have raised billions of dollars in funding this year.

“Those are investments that you can easily make in a country like Canada because we’re so profitable,” said Mr Groen.

“The logistical network in Europe is not yet profitable,” he added, meaning that the dark store model was “not the logical way forward in Europe at this point in time”.

Just Eat Takeaway said it expected order growth of more than 45 per cent for the full year, excluding Grubhub, with gross transaction values including the US business likely to be between €28 billion and €30 billion. – Copyright The Financial Times Limited 2021