Mergers & Takeovers - Just Eat
JUST EAT
The Tencent bet that turned into billions
A big gamble on China changed the game for company behind hostile takeover
Tencent was an obscure Chinese internet messaging company when Koos Bekker took a $34 million punt on the business 18 years ago. At the time Mr Bekker was chief executive of Naspers, a South African media business and newspaper publisher known for its nationalist stance in the apartheid era. But that bet, which handed Naspers a 46.5 per cent stake in Tencent, would change everything.
It made a billionaire of Mr Bekker, 66, who remains Naspers’ chairman, and helped to transform the Cape Town-based company into the sprawling, internet-focused conglomerate that was behind yesterday’s £4.9 billion hostile takeover bid for Just Eat.
Tencent is now one of the world’s biggest technology companies and its WeChat app is the most popular messaging service in China. Its market value has swelled to about $400 billion and Naspers, via Prosus, its subsidiary, still owns 31 per cent.
Naspers has an array of investments across the media and technology industries. Its consumer-focused internet assets are housed in Prosus, which was listed in Amsterdam last month and in which Naspers retains a controlling 74 per cent stake.
It is the third biggest company on the Amsterdam exchange, behind Royal Dutch Shell, the oil major, and Unilever, the consumer goods group. It is also Europe’s second largest technology company behind SAP, of Germany. As well as Tencent, Prosus has stakes in everything from Mail.ru, the Russian internet business, to Letgo, an American online classifieds service.
Mr van Dijk said that Prosus was “committed to food delivery for the long term”, having invested $2.8 billion in the sector since 2016.
Since its UK launch in 2006, Just Eat has focused almost exclusively on the marketplace model, where the operator acts as a middleman between the customer and the restaurant, leaving the job of delivery to the restaurant.
However, in the face of competition from Deliveroo and Uber, it has started to develop its own delivery network. Mr van Dijk said that much of the investment planned for Just Eat in the event of a takeover would be used to expand its own-delivery operation.
For the time being, though, the big question facing Mr van Dijk is whether to sweeten the offer, having had his first three proposals rebuffed.
Andrew Ross, an analyst at Barclays, said that the all-paper merger proposal from Takeaway.com remained superior, though “that could change if Prosus were to offer towards 800p”.
Money is clearly not an issue for Prosus, which is estimated to have headroom of up to $20 billion.
The issue for Just Eat shareholders is trying to compare two very different proposals: Prosus’s all-cash, 710p-a-share offer versus an all-paper bid whose value goes up and down with the Takeaway.com share price. When the initial deal was announced in July, it valued Just Eat at 731p a share, but the price has been driven down by investors’ scepticism and market softness and by Monday evening that 731p was worth only 594p.
Ironically, one of the main factors for the fall in the Takeaway.com share price in recent weeks has been the sale by the Prosus-backed Delivery Hero of a big chunk of its shares in Takeaway.com. This, in turn, has put downward pressure on the Just Eat share price.
Mr van Dijk dismissed any suggestion of foul play, insisting that Delivery Hero was a separate company that made its own decisions.
Asked whether Prosus might end up also swallowing Delivery Hero to grab an even bigger share of the £83 billion takeaway market, he said: “We’ll leave such speculation to others.”
Tencent is now one of the world’s biggest technology companies and its WeChat app is the most popular messaging service in China. Its market value has swelled to about $400 billion and Naspers, via Prosus, its subsidiary, still owns 31 per cent.
Naspers has an array of investments across the media and technology industries. Its consumer-focused internet assets are housed in Prosus, which was listed in Amsterdam last month and in which Naspers retains a controlling 74 per cent stake.
It is the third biggest company on the Amsterdam exchange, behind Royal Dutch Shell, the oil major, and Unilever, the consumer goods group. It is also Europe’s second largest technology company behind SAP, of Germany. As well as Tencent, Prosus has stakes in everything from Mail.ru, the Russian internet business, to Letgo, an American online classifieds service.
Mr van Dijk said that Prosus was “committed to food delivery for the long term”, having invested $2.8 billion in the sector since 2016.
Since its UK launch in 2006, Just Eat has focused almost exclusively on the marketplace model, where the operator acts as a middleman between the customer and the restaurant, leaving the job of delivery to the restaurant.
However, in the face of competition from Deliveroo and Uber, it has started to develop its own delivery network. Mr van Dijk said that much of the investment planned for Just Eat in the event of a takeover would be used to expand its own-delivery operation.
For the time being, though, the big question facing Mr van Dijk is whether to sweeten the offer, having had his first three proposals rebuffed.
Andrew Ross, an analyst at Barclays, said that the all-paper merger proposal from Takeaway.com remained superior, though “that could change if Prosus were to offer towards 800p”.
Money is clearly not an issue for Prosus, which is estimated to have headroom of up to $20 billion.
The issue for Just Eat shareholders is trying to compare two very different proposals: Prosus’s all-cash, 710p-a-share offer versus an all-paper bid whose value goes up and down with the Takeaway.com share price. When the initial deal was announced in July, it valued Just Eat at 731p a share, but the price has been driven down by investors’ scepticism and market softness and by Monday evening that 731p was worth only 594p.
Ironically, one of the main factors for the fall in the Takeaway.com share price in recent weeks has been the sale by the Prosus-backed Delivery Hero of a big chunk of its shares in Takeaway.com. This, in turn, has put downward pressure on the Just Eat share price.
Mr van Dijk dismissed any suggestion of foul play, insisting that Delivery Hero was a separate company that made its own decisions.
Asked whether Prosus might end up also swallowing Delivery Hero to grab an even bigger share of the £83 billion takeaway market, he said: “We’ll leave such speculation to others.”
Comments
Post a Comment