Activist investor warns Just Eat at risk of hostile takeover

One of Just Eat’s largest shareholders calls for the food delivery group to take urgent action.

Just Eat (JET), now one of the world’s largest food delivery companies, has investors concerned.

Cat Rock Capital, one of the biggest shareholders of Just Eat, is urging the company to prop up its share price to avoid a hostile takeover.

The activist investor has raised concerns about the food delivery giant, blaming the sharp fall in its share price this year on “deeply flawed communication” with its investors.

The investment group, which owns a 4.7 per cent stake, said that while the company had shown a strong operational performance, it was “deeply disappointed by the poor handling of its relationship with investors”.

Cat Rock Capital, which also pushed for the Just Eat merger in 2019, is now calling on the Amsterdam-based food delivery group to explore “strategic options,” including divestments or a merger with a larger rival such as DoorDash and Delivery Hero.

Alex Captain, Founder and Managing Partner, Cat Rock Capital, commented: “Just Eat is a fantastic business with #1 positions in many of the world’s most valuable online food delivery markets and a long runway for growth.

“However, JET has failed to upgrade its communications with investors and the markets since IPO, leaving it deeply undervalued and vulnerable to takeover bids at far below intrinsic value.

“JET can quickly and materially improve its standing in the capital markets by improving transparency, selling non-core assets, and exploring strategic options to strengthen the business and generate significant shareholder value.”

Catlock’s decision to publish a complaint follows a private letter from another activist shareholder, Oceanwood Capital Management, to JET management last month, raising similar concerns about the benefits of unwanted acquisitions.

Regulatory Headwind

The company recently provided an upbeat business update and noted that it could face questions from FTSE indexes once the London Stock Exchange performs the semi-annual review scheduled in September.

Since Just Eat is headquartered in Amsterdam and Grubhub is in Chicago, the investment management team will have to determine the nationality of the stock listings for the purpose of inclusion in the index. If there is a removal from an index, it will lead to investors losing their stock to conform to the index makeup.

Not Investment Advice Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.