By Joe Hoppe
Just Eat Takeaway.com NV investor Cat Rock Capital Management LP said Monday that it has urged the company to sell or spin-off Grubhub by the end of the year.
Cat Rock--which is the Amsterdam-based food-delivery company's second-largest shareholder with a 6.5% stake--said it has sent a letter to management urging the divestment of Grubhub by Dec. 31, in order to refocus the business and address what it sees as a deep undervaluation of Just Eat's equity since the business was acquired on June 15.
London-listed shares in Just Eat Takeaway at 0923 GMT were down 0.4% at 5,721 pence, but are down 30% in the year to date. This compares with a 50% rise in the year to date for U.S. peer DoorDash Inc. and a 10% decline for shares in Germany-based Delivery Hero SE.
Just Eat said that while Grubhub has some specific challenges it is a large and growing business with good underlying profitability, and for which it has a clear improvement plan. It added that Grubhub has significant strategic value and it will play a role in an expected consolidation of the wider U.S. market over time.
Cat Rock founder and managing partner Alex Captain said he believes that while Grubhub adds significant strategic value, it is being capitalized at a significant negative value in Just Eat's stock price, because it reduced the company's financial flexibility and led investors to question management's judgment and motivations. Mr. Captain said a sale of Grubhub at any price would significantly improve Just Eat's share value.
"If Just Eat management fails to pull this lever by Dec. 31, it will be clear to us and other shareholders that Just Eat management cannot move quickly and decisively enough to compete in a fast-paced sector such as online food delivery," he said.
The investor added that it was pleased to see a clear, data-driven vision at Just Eat's recent capital markets day and that it was excited for its prospects.
In July, Cat Rock urged Just Eat to change how it talks to investors, sell non-core assets and explore a merger. In 2020, Cat Rock encouraged the then U.K.-based Just Eat to merge with Takeaway.com, of the Netherlands, instead of accepting a rival bid from Prosus NV. The combined company then acquired GrubHub for $7.3 billion earlier this year.
Write to Joe Hoppe at joseph.hoppe@wsj.com
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October 25, 2021 at 04:45PM
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