Just Eat revenue rises as it hopes for £9bn end-of-year merger with Takeaway.com
Just Eat’s third quarter revenue rose 25 per cent, it revealed today, as it hopes a £9bn merger with Dutch rival Takeaway.com willbe tied up by the end of the year.
Despite this, shares fell five per cent in early trading as analysts were sceptical the deal would get past shareholders at a meeting pencilled in for December.
Read more: Asda and Just Eat launch express grocery delivery service
The London-listed food delivery giant said its turnaround plan was starting to bear fruit in Australia, while its UK business remained “a clear leader”.
Revenue was £248m, a 25 per cent year-on-year increase for the three months to 30 September. Orders rose 16 per cent to £62m.
Just Eat said the Takeaway.com deal, which it agreed in August, could be completed after a general shareholder meeting in December.
The merger will create one of the largest food delivery companies in the world, and will likely cap off a resurgent year for Just Eat.
But Liberum analysts said: “We are sceptical that the proposed merger will be accepted by Just Eat shareholders as we believe that it substantially undervalues the business.”
They said the bid, which values Just Eat at 770p-780p per share, was too low. In sharp contrast, they gave it a buy rating and a target price of 1,360p.
“For comparison, Delivery Hero’s German assets were bought by Takeaway.com for over nine-times full-year 2018 revenues, which would value Just Eat’s shares at 1,030p on a comparative basis,” they advised.
“We do accept that a slightly weaker third-quarter performance serves in the bid’s favour, but are still [unsure] as to whether it will pass.”
‘We are seeing a structural shift’
The London-listed firm reaffirmed its forecast for full-year revenue to be between £1bn and £1.1bn.
Underlying core profit looks set to come in between £185m and £205m, including the hit from its upcoming merger of between £10m and £12m.
Just Eat interim chief executive Peter Duffy said: “Our UK marketplace business is a strong and clear leader; however, we are seeing a structural shift, with increasing demand on our platform from customers for broader cuisine choice and more meal occasions, led by quick service restaurant chains.
“The strong growth in our UK delivery business shows that we can successfully meet these needs.”
Just Eat struggled in the face of increasing competition from companies like Deliveroo and Uber Eats last year, but said revenue was up 28 per cent for the year so far.
In the UK, its main market, orders increased by eight per cent to 33m for the quarter, driven by rapid growth in its operation.
Read more: Just Eat ready to serve up £9bn merger with Takeaway.com
However, that was counteracted by slower growth in its marketplace business, which was affected by a “broadly softer consumer spending backdrop”.
Just Eat shares were valued at 590p as of 8.50am, leaving them 5.5 per cent down on their 620p opening price.
Main image: Getty