Takeaway delivery firm Just Eat faces mounting pressure to merge with rival after second investor breaks ranks to call for shake-up
Under pressure: Just Eat may have to merge with a rival
Takeaway delivery firm Just Eat faces mounting pressure to merge with a rival after a second investor broke ranks to call for a shake-up.
Last week activist investor Cat Rock Capital, which holds 2 per cent of Just Eat, wrote an open letter to the firm’s board demanding a major overhaul.
Just Eat has until now been able to dismiss the letter as a lone critic’s view. But now another of its largest shareholders has broken ranks to back the call for action and has vowed to write to the board.
The Mail on Sunday understands that a further three shareholders have also written to the board in the past week to express their frustration at poor communication from the company over an action plan they deem worthy of discussion.
An investor who holds more than a million shares but wished to remain anonymous, said: ‘We believe Cat Rock’s argument for a merger with a well-run peer is worth serious consideration.
‘Just Eat needs exceptional management to make up for lost time and the best teams are already running leading online food delivery companies.
‘We would be deeply disappointed if the board ignored this path for long-term value creation. We will be writing to the Just Eat board to express our support for Cat Rock’s proposal.’
In its letter last week, Cat Rock said the company should merge with a rival rather than continue its search to fill its vacant chief executive role.
The US-based hedge fund was particularly disappointed with the performance under the company’s former boss, Peter Plumb, who quit suddenly three weeks ago.
The former Moneysupermarket boss was savaged by Cat Rock, which noted that several key executives resigned during his leadership. Other investors are said to be unhappy at the latest appointment of Kevin Edwards – a former marketing man for the Movember charity – to head Just Eat’s Canadian business Skip The Dishes in place of its co-founder Chris Simair. Shareholders claim Edwards lacks the logistics and ecommerce skills needed for the job.
Cat Rock said: ‘Ignoring the Plumb lesson, Just Eat shockingly entrusted the leadership of this crucial business to the former chief marketing officer of the Movember Foundation, a not-for-profit organisation that gets men to grow moustaches.’
Just Eat’s shares have plunged 12 per cent in the past year and the firm, which issued a profit warning in November, has dropped out of the FTSE 100 index of blue chip companies.
Cat Rock’s founder and chief executive Alex Captain said Just Eat was ‘the worst-performing public equity in online food delivery globally’. He urged the board to consider a merger.
In a fiery war of words, a supportive shareholder of Just Eat raised questions of Cat Rock’s intent.
Sarasin, the asset manager, pointed out that Cat Rock has a 4 per cent shareholding in Takeaway and so may have a vested interest in a merger.
It added: ‘Just Eat has market leading positions in the majority of their markets. We see few in-market synergies from a combination with other large aggregators at this time.’
Cat Rock sources pointed out that at least three other Just Eat shareholders also own a stake in Takeaway.
Just Eat has suffered in recent years due to the rise in popularity of rivals Deliveroo and Uber Eats.
However, it has a strong presence in Canada and Brazil, with suggestions of a merger with its Brazilian partners iFood, or a deal with Naspers, which owns Delivery Hero.
Just Eat said: ‘We take communications with all our shareholders extremely seriously. We are carrying out a thorough CEO appointment process and we will update the market as appropriate.’