Technology investor Prosus said on Friday that it would pay up to €1.8 billion ($1.8 billion) to buy the 33% of Brazil's iFood from rival Just Eat Takeaway.com that it does not already own.
The news sent shares in Takeaway surging 25% higher to 16.60 euros in early Amsterdam trade. Analysts said the cash would relieve stress on the loss-making company's balance sheet as it races to achieve operating profitability by next year.
Prosus shares were up 1% at €64.36.
"While (Takeaway) would probably rather have kept the stake, the corporate finance benefits of the sale were obviously too big to ignore," said Jefferies analyst Giles Thorne. "A clear positive for the equity."
The deal will give Prosus sole control of iFood, considered one of the most attractive food delivery businesses in one of the world's biggest markets.
Prosus said it would pay €1.5 billion in cash and potentially up to €300 million more.
The price amounts to about half the market capitalisation of Takeaway, Europe's largest meals delivery company, and more than the market value of its rival Deliveroo.
"Increasing our stake to full ownership is a demonstration of our committed and disciplined approach to investment and reflects our confidence in the long-term potential of iFood," said Bob van Dijk, chief executive, Prosus in a statement.
Takeaway, whose shares had lost two thirds of their value over the past year, had long been seeking to sell the iFood stake, but had been unable to reach terms.
While they were partners in iFood, Prosus and Takeaway had fought bitterly during a 2020 takeover battle for Just Eat, which Takeaway eventually won.
Turned Down Offer
Jitse Groen, CEO, Takeaway said in August 2021 he had turned down a €2.3 billion offer for iFood from an unidentified bidder as "inadequate", as valuations of meals companies soared in the COVID-19 pandemic.
The price Takeaway is receiving now "represents an equity multiple of over five times" the company's investments, it said.
ING Bank analyst Mark Hesselink described the price for Takeaway as "disappointing."
"The fact that there was only one real buyer for the stake (i.e. Prosus) surely did not help valuation," he said in note.
According to Takeaway's half year results last month, iFood made a net loss of about €120 million in the period, though sales grew 28%.
Prosus said iFood was making about 70 million deliveries per month.
Takeaway said it expected the deal to close in the fourth quarter and it was continuing to explore "the partial or full sale" of Grubhub, the U.S. meals delivery company it bought last year for $7.3 billion.