Just Eat shareholder Cat Rock Capital on Tuesday urged investors to back an all-share merger with Takeaway.com, saying it believed the combination could create a company worth 1,200 pence a share in little more than a year.
Just Eat shareholders have two offers to consider: a tie-up between the British group and its Netherlands-based peer Takeaway.com and a 710 pence-a-share cash offer from technology company Prosus.
Just Eat urged shareholders on Monday to shun the $6.3 billion offer from Prosus, saying the lower valued deal with Takeaway.com was a better bet as it would create the largest food delivery firm outside China.
Cat Rock, which controls about 3% of Just Eat's shares and has a 5.69% stake in Takeaway.com, said the Prosus offer significantly undervalued Just Eat and shared none of the future potential of the business with Just Eat shareholders.
"A Just Eat merger with Takeaway.com would create a formidable global leader with significant growth prospects and world-class management," Cat Rock founder Alex Captain said in an open letter.
"We believe this combined company could comfortably be worth over 1,200p per share by the end of 2020, providing Just Eat shareholders with 60% upside to the current share price."
Takeaway's offer values Just Eat's shares at 678.6 pence each, based on both companies' share prices on Tuesday morning.
Forecasts and Historical Trading
Cat Rock said its view of the future share price was based on revenue forecasts for both companies and historical trading averages.
It said Just Eat's shares had been hurt by almost three years of poor management at the group and a sale to Prosus at the current offer price would only crystallize the disappointing performance of the stock.
It added that rejecting both offers would continue the status quo that had led to the underperformance.
Prosus, the Dutch arm of South African e-commerce giant Naspers, said on Friday that the rationale for its bid remained strong, despite a rally in Takeaway's shares that has narrowed the gap between the offers.
Both offers are open until 11 December.