Just Eat told to seek out mergers

Just Eat should merge with a rival online meal-delivery company because the board has shown that it can’t find a suitable chief executive, according to Cat Rock Capital Management, which owns about 2% of Just Eat.

The US investment firm sent an open letter to Just Eat’s board of directors saying it made a mistake in appointing Peter Plumb as CEO in 2017. Just Eat should use global consolidation to its advantage and a merger would deliver “real value,” according to Cat Rock.

“You basically have a situation where you can get a world-class CEO and delivery capabilities, while also potentially securing a premium valuation for shareholders,” Alex Captain, founder of Cat Rock, said.

“We are very focused on ensuring the board engages in discussions to secure this outcome for shareholders.”

A spokesman for Just Eat said it takes communications with all of its shareholders “extremely seriously,” adding it’s “carrying out a thorough CEO appointment process and we will update the market as appropriate”.

Mr Plumb stepped down, and Cat Rock said Just Eat has ignored two suggestions of potential replacements who have experience in online food delivery. The stock has dropped 13% in the past 12 months and several key executives resigned during Mr Plumb’s tenure, including former chief operating officer Adrian Blair.

“Any new CEO will face the daunting task of rebuilding Just Eat’s entire management team while simultaneously attempting to execute on the company’s marketplace and delivery initiatives,” Cat Rock said.

It is, therefore, clear that a merger would be the best way for Just Eat to secure the management talent and delivery expertise it needs to compete.

Consolidation has been heating up. Dutch player Takeaway.com agreed to acquire the German businesses of Delivery Hero for approximately €930m in December, while Uber’s bid for Deliveroo reportedly stalled over a disagreement.

Takeaway.com and Delivery Hero have market values of about €3bn and €6.5bn respectively. Other industry players include GrubHub, Meituan Dianping, Uber Eats, DoorDash, Postmates and Deliveroo.

“Not all of those are going to be legitimate industry peers for Just Eat to negotiate with, but we do think there are multiple logical suitors,” Mr Captain said.

- Bloomberg

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