Just Eat Plc And The Latest Takeover Offer For It

  • Oct 30, 2019 GMT
  • Team Kalkine
Just Eat Plc And The Latest Takeover Offer For It

Just Eat Plc

Just Eat Plc (JE.) is a consumer services company based in London, the United Kingdom with operations across the United Kingdom and 12 other countries - New Zealand, Australia, Benelux, Canada, Denmark, France, Ireland, Norway and Switzerland as well as Italy, Mexico and Spain. The company acts as an online marketplace for food delivery, by partnering with various food businesses, restaurants, cafes and cloud kitchens to deliver food to its customers within the comfort of their homes or any other place across the countries it runs its operations in. The company allows the customers to place food orders from the restaurants in the region, through its online website or app, which is based on the company’s proprietary technology. This app then assigns the nearest delivery chauffeur to the customer, who picks up the order from the restaurant and delivers it to the customer in the quickest time possible. The company presently has more than 28 million active customers on its platform across the 13 countries. The company has 3,059 peak orders per minute which require a very strong system of operations, which for the company has been backed by Amazon Web Services (AWS), allowing the company to quickly deliver new specifications on the platform, along with the scalability. On the restaurant partnership side, the company operates through three main products which are Eat Box, Partner Centre and Driverapp which enables these partners in the management of orders, deliveries as well as the data generated while conducting the business. The company also allows the customers to track their food deliveries beginning from the preparation of the food to tracking the rider through GPS mechanisms. Around 92,000 restaurant partners have this product enabled with them. Restaurants partner with Just Plc because they take extra 4,000 orders per year, and also do the marketing for these restaurants through their platforms which allow these restaurants to save £13,000 per year on an average along with other exclusive perks that can include discounts from wholesalers and insurers.

Financial Performance (Half-year results for the six months ended 30th June 2019)

On 31st July 2019, the company announced its half-year results for the six months ended 30th June 2019. The company reported a revenue of £464.5 million during the period H1 2019. This was an increase of 30 per cent year on year as compared to the revenue reported in the first half of 2018 at £358.4 million. This growth was driven by the number of orders going up by 21 per cent year on year from 102.5 million in H1 2018 to 123.8 million in the first half of 2019. The company also reported to have added 2 million net new customers in the reporting period. The company reported the Underlying Earnings before Interests taxes depreciation and amortisation (uEBITDA) excluding Mexico lower by 6 per cent year on year from £86.0 million in the first half of 2018 to £72.4 million in the first half of 2019. The company reported a massive decline in Profit before tax of 98 per cent year on year from £48.1 million in H1 2018 to £0.8 million in H1 2019. This was driven by the planned investments that the company had made in Delivery and iFood during the reporting period. This led to the Adjusted Basic Earnings per share (EPS) to decline by 36 per cent from GBX 8.9 per share in the first half of 2018 to GBX 5.7 per share in the first half of 2019. The company reported a Basic Loss per share at GBX 0.8 in H1 2019, a significant negative change of 115 per cent year on year from the Basic Earnings per share reported in the first half of 2018 at GBX 5.5 per share. The company reported to have generated a net cash of £65.9 million from operations during the reporting period of H1 2019, as compared to £77.2 million net cash generated from operations in the first half of 2018, showing a decline of 15 per cent year on year. It was also reported that the board of Just Eat Plc was confident in the performance of the company and hence reaffirmed the outlook for the entire year with the revenue for FY 2019 expected to be in the proximity of £1.0 billion to £1.1 billion and the underlying Earnings Before Interest Taxes Depreciation and Amortization (uEBITDA) anticipated to be in the range of £185 million to £205 million including the uEBITDA loss that the company expects to make from the Brazilian and Mexican regions in the range of £80 million to £100 million.

  H1 2019 H1 2018 (Restated) YoY %
Revenue (£m) 464.5 358.4 30%
Underlying EBITDA (excluding Mexico) (£m) 72.4 86 -16%
Profit before tax (£m) 0.8 48.1 -98%
Adjusted Basic Earnings Per Share (EPS) (GBX) 5.7 8.9 -36%
Basic EPS (GBX) -0.8 5.5 -115%
Net cash generated by operations (£m) 65.9 77.2 -15%

Source: Company Website

Latest News and Takeover offer

On 27th July 2019, Just Eat Plc made a press release regarding a possible offer for an all-share combination of Takeaway.com with the company. On 29th July 2019, in another press release, the company confirmed that they had reached in principle agreement on important terms of the possible all-share combination of both the companies to create a new entity that would be called Just eat Takeaway.com NV. It was reported that the intended combination of the two groups would form one of the largest online food delivery companies in the world, with operations on a large scale, synergy of two of the largest food networks in the world, tactical sight, world-beating technology and systemic capabilities as well as prime places in premium market places and a varied geopolitical existence. The intended merger is expected to be an important strategical decision for all the key stakeholders as well as customers of the two groups.

In the second half of October 2019, it was reported that one of Takeaway.com’s competitor Prosus, which is a spin-off of Nasper’s international, a company that recently raised US $100 billion from an Initial Public Offering becoming one of Europe’s most valuable online company, made an all-cash £4.9 billion offer for Just Eat Plc. Some News sources had reported the offer to be “Opportunistic”, though the Chief Executive Officer of Prosus, Bob Van Dijk said that this was not opportunistic and in fact they have had their eyes on Just East for a long time as the two companies have been partners in the Brazilian region. Prosus’ offer is approximately 20 per cent higher than the offer previously made Takeaway.com, putting the investors of Just Eat Plc in a Dilemma. The company made a statement saying that the offer from Prosus has been considered by the company, but it significantly undervalues the assets of the company. The company rejected the successive unsolicited offers of Prosus N.V. of 670 pence, 700 pence and 710 pence per share.

Share Price Performance

On 30th October 2019, at 08:16 A.M. GMT, while writing, Just Eat Plc’s share price was trading at GBX 749.12 per share, an increase of 0.10 per cent or GBX 0.72 per share as compared to the previous day’s closing price, which was at GBX 748.40 per share. While writing, the Just Eat Plc stock was trading 10.08 per cent below the 52-week high price, which was GBX 833.14 per share, set on July 29, 2019. This was also 44.28 per cent above the 52-week low price at GBX 519.2 per share, which the company’s stock set on November 20, 2018. The company’s market capitalisation was reported to be at GBP 5.108 billion.

By the time of writing, 403 of the company’s shares had been traded in the market. The average volume of trading per day, for the last one year in the market, was 6.20 million stocks. The stock has reportedly lost 27.66 per cent in value in the last one year, from the price of GBX 586.80 per share. There has been a positive change in the last 6 months in the value of Just Eat Plc’s stock of about 7.17 per cent from the price of GBX 699.00. The company’s stock has also reportedly gained 12.11 per cent in value in the last one month from the price of GBX 668.2.

The beta of the company’s stock has been reported to be at 1.3932. Through this, it can be inferred that the movement in the company’s stock is more volatile, in comparison to the movement of the benchmark market index.

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