The battle for Britain's Just Eat, which pits investment giant Prosus against Dutch food ordering service Takeaway.com, is set to roll on through the Christmas holidays.
Both suitors are seeking to woo shareholders in the British company and secure a deal that will be pivotal for the future of the fast expanding food delivery industry. But if the contest is unresolved as of 27 December, as now seems likely, Britain's Takeover Panel is set to step in and organise a rare auction between the rival bidders.
Bidding So Far
Prosus, a Dutch-listed business spun out of South Africa's Naspers, raised its cash bid on Monday to 740 pence per share, from 710 pence per share, valuing Just Eat at £5.05 billion ($6.5 billion).
Takeaway's all-share offer is worth 690 pence per share as of trading prices and exchange rates on Thursday.
Why Settle For Less?
The European online food delivery industry is expected to generate $16.5 billion in revenue this year and could grow by more than 10% per year over the next decade, according to Statistica.
Just Eat's board and some shareholders back the Takeway deal because they believe the combination will be more successful in the long run, creating a powerhouse in Europe's most profitable markets.
Takeaway has argued that delivering meals for restaurants will struggle to be profitable and aims instead at becoming the dominant ordering platform in each market and taking a cut on each order. Those margins are better.
Prosus says that without being a dominant player in both delivery and ordering, competitors such as Uber Eats and Deliveroo will overtake Just Eat.
It plans to invest millions in Just Eat's integrated delivery capabilities - including developing unbranded restaurant kitchens known as "dark" or "cloud" kitchens, where food is prepared on demand for delivery.
There is a large overlap in Just Eat and Takeaway's shareholder bases, with seven investors appearing in both companies' top 20. They include Capital Research Global Investors, which is the second biggest in both, as well as Baillie Gifford & Co, MFS Investment Management and Cat Rock.
Cat Rock so far backs Takeaway's option, while the others have not said which they prefer.
Prosus is 74% owned by Naspers and has a 22% holding in Germany-based Delivery Hero, which in turn owns a stake in Takeaway.
Takeaway is a market leader in the Netherlands, Germany, Belgium, Austria, Poland, Bulgaria and Israel, and operates in Switzerland, Luxembourg, Portugal and Romania.
Just Eat is in Britain, Canada, Australia and New Zealand, and in continental European markets including Denmark, France and Italy.
Prosus, which also owns a 38.8% stake in India's Swiggy, is partners with Just Eat in Brazil's largest food delivery company iFood: Prosus has a controlling stake.
To date only a fraction of shareholders have tendered their shares, despite a deadline set for Wednesday, Dec. 11.
That's because neither Prosus nor Takeaway has said that their latest bid is their final offer. Just Eat shares are trading at 780p, suggesting the market believes higher bids are still in the offing.
As of 6 December, just 12,295 shareholders had accepted the Prosus bid, out of around 683 million.
On 12 December, Takeaway.com said it had received shares representing about 13.53% of Just Eat shares outstanding.
Both companies have now extended their offers.
When Will It End?
If the current standoff persists through 27 December, Britain's Takeover Panel will organise an auction.
The most recent precedent for this was September 2018, when Comcast outbid Fox for control of British broadcaster Sky.
The process this time round has yet to be formally determined and the Christmas and new year holidays may disrupt the usual plan of action.
Still, under standard Takeover Panel procedures, an auction would run for up to five working days starting on 30 December, continuing until neither side is willing or able to increase their bid.
That means a decision could be made by 6 January.