The battle for the future of online food delivery just got a whole lot spicier.
South African tech investment firm Naspers said it was launching a takeover offer for Britain’s Just Eat in a bid to become “the world’s leading food delivery business.”
The unsolicited bid values Just Eat at £4.9 billion ($6.3 billion), and could spoil Just Eat’s plans for an all-stock merger with Dutch rival Takeaway.com. The announcement sent Just Eat shares up 26% in London.
Naspers is making the offer via Prosus, a unit it listed on Amsterdam’s stock exchange last month creating Europe’s biggest consumer tech company in the process. (Prosus’ main asset is its 31% stake in Chinese internet giant Tencent.)
The move is a clear sign of Naspers’ ambitions to use its financial muscle to take on Uber and Amazon in food delivery, a market that could be worth $331 billion globally by 2022, according to Euromonitor. Amazon made a play for the European market earlier this year by investing millions in Deliveroo.
The Just Eat deal would add to Naspers’ stakes in Europe’s Delivery Hero, iFood in Brazil and one of India’s biggest food delivery startups, Swiggy.
Naspers has invested $2.8 billion since 2016 building its online food delivery empire, which now spans 41 countries and 400,000 restaurant partners. The acquisition of Just Eat would add 13 markets and 100,000 restaurant partners to this network.
Through Tencent, the South African group also owns an indirect stake in Chinese food delivery giant, Meituan Dianping, which was worth about $50 billion when it went public in Hong Kong in 2018.
“The most significant area for investment in Prosus into financial year 2020 is food delivery,” Naspers CEO Bob van Dijk said in a presentation to investors in August. “Food delivery fits perfectly within our strategy as it targets a market with significant consumer spend that can be fundamentally disrupted by technology,” he said.
Countries such as India and Brazil offer particular opportunities for growth, van Dijk said, noting that the average household in India orders just one meal per year, compared with 10 in the United Kingdom and 13 in the United States.
In a statement, Just Eat recommended that shareholders reject the Prosus offer, which it said “significantly undervalues” the company and its prospects, and stick with the Takeaway.com merger.
If it succeeds, the South African company will be pitched into a fierce battle for the UK online food market against Uber Eats and Deliveroo.
Amazon’s investment in Deliveroo is currently being scrutinized by the UK’s Competition and Markets Authority.
Prosus defends its offer
Prosus said its offer provided Just Eat shareholders the “certainty of an all-cash offer” against a challenging backdrop in online food delivery, which has sent Takeaway.com’s share price 15% lower since July.
In order to maintain growth and defend its market position, Just Eat requires more investment than its current management team planned to make, Prosus said. And the companies are already working together in Brazil.
“Our plan is to support the Just Eat management team, with whom we have worked closely as joint investors in iFood, to deliver on the exciting opportunities to grow the business,” van Dijk said in a statement.