Cat Rock Capital Comments on Revised Prosus Offer for Just Eat

Prosus Dramatically Undervalues Just Eat with Revised Offer of 740p per Share

Prosus Needs to Bid 925p per Share to Compete with Takeaway.com Merger

Takeaway.com Merger Could Deliver 1,200p of Value by the End of 2020 (>50% Return)

GREENWICH, Conn.--()--Cat Rock Capital Management LP (together with its affiliates, “Cat Rock Capital”), a long-term oriented investment firm and beneficial owner of approximately 17.7 million shares of the common stock of Just Eat plc (“Just Eat” or the “Company”) (LSE: JE), representing circa 3% of Just Eat’s outstanding shares,(1) today issued the following statement regarding the proposed offers for Just Eat from Prosus N.V. (“Prosus”) and Takeaway.com N.V. (“Takeaway.com”).

Alex Captain, Founder and Managing Partner, Cat Rock Capital Management LP, commented:

Prosus continues to dramatically undervalue Just Eat with its revised 740p per share offer. This revised Prosus offer is wholly inadequate and shows Just Eat shareholders that Prosus cannot muster a credible bid.

We think a Prosus cash bid needs to be at least 5.0x 2020 consensus revenue, or 925p per share, in order to compete with a Takeaway.com merger that we believe could comfortably be worth 1,200p per share by the end of 2020 (>50% return from current Just Eat trading levels).

Now that Prosus has shown its hand, we urge shareholders to accept the Takeaway.com offer that has been unanimously recommended by the Just Eat Board.

Prosus is struggling to pay a fair price for Just Eat because it lacks a credible plan for winning in the UK. Throwing money at the market under existing management is not a credible plan. Prosus continues to present highly misleading information to Just Eat shareholders in attempting to convince them to accept its low-ball bid. As just one example, Prosus claims that ‘Low Competition’ markets represent 65% of Takeaway.com’s first-half 2019 orders even though Takeaway.com’s first half results only include Delivery Hero’s German business for one of the two quarters.

Prosus claims that the Takeaway.com offer carries ‘significant risks’ for Just Eat shareholders because of Takeaway.com’s valuation at Friday’s closing price of €86.50 per share. We strongly disagree with Prosus’s view and believe Takeaway.com equity is attractively valued at these levels with or without a Just Eat merger. Takeaway.com earns ~80% of its pro-forma revenue from Germany and the Netherlands, where we believe the market structure supports strong growth with high levels of profitability. At €86.50 per share, Takeaway.com trades at just 28x 2020e normalized free cash flow assuming a 45% normalized margin. We believe this price represents good value for a company that grew revenue +37% organically in the first half of 2019 with significant additional runway for growth.

Prosus continues to compare Just Eat and Takeaway.com to online food delivery players in other markets, like GrubHub and Delivery Hero. We think these comparisons are highly misleading because Just Eat and Takeaway.com have market-leading positions in the UK, Germany, and the Netherlands where they are multiple times the size of their next largest competitor and where a significant share of restaurants offer their own delivery. GrubHub and Delivery Hero derive some or all of their revenue from markets where they are not market leaders or have a modest market-share advantage and where a smaller share of restaurants offer their own delivery. We believe these characteristics radically change the outlook for future profitability at GrubHub and Delivery Hero.

Comparing Takeaway.com to supposed ‘peers’ such as GrubHub and Delivery Hero is like comparing Booking.com to supposed ‘peers’ such as Orbitz, Travelocity, and Expedia. Market structure matters.

Prosus has a strong incentive to convince Just Eat shareholders that Just Eat’s problems are deep, structural, and expensive to fix. As described before in our letters available at JustEatMustDeliver.com, we think these arguments are simply wrong.

As long-term shareholders at Just Eat, it is clear to us that Just Eat is a high-quality business that has suffered from the absence of an experienced CEO over the past two and a half years. We think the Takeaway.com merger solves this problem by combining forces with perhaps the most well-run online food delivery company in the world.

We urge other Just Eat shareholders to join us in accepting the Takeaway.com offer that the Just Eat Board has unanimously recommended.”

Cat Rock’s previously released open letters to the Just Eat Board can be downloaded and read in full at JustEatMustDeliver.com.

Sidley Austin LLP and White & Case LLP are serving as legal advisors to Cat Rock Capital Management LP.

About Cat Rock Capital Management LP

Cat Rock Capital Management LP is a long-term focused investment firm that manages capital on behalf of pension funds, endowments, foundations, and other institutional investors. It seeks to invest in a select number of high-quality companies, with a long-term approach that emphasizes deep fundamental research. Cat Rock Capital is based in Connecticut, USA and was founded in 2015 by Alex Captain, a former Partner at Tiger Global Management.

Notes:

(1) Cat Rock also owns approximately 3.6 million shares of Takeaway.com.

DISCLAIMER

Cat Rock Capital Management LP and certain of its affiliates and controlling persons (collectively, “Cat Rock Capital”), is publishing this announcement solely for the information of other shareholders in Just Eat plc. This announcement is provided merely for general informational purposes and is not intended to be, nor should it be construed as (1) investment, financial, tax or legal advice, or (2) a recommendation to buy, sell or hold any security or other investment, or to pursue any investment style or strategy. Neither the information nor any opinion contained in this announcement constitutes an inducement or offer to purchase or sell or a solicitation of an offer to purchase or sell any securities or other investments in Just Eat plc (“Just Eat”), Takeaway.com N.V. (“Takeaway.com”), or any other company by Cat Rock Capital or any fund or other entity managed directly or indirectly by Cat Rock Capital in any jurisdiction. This announcement does not consider the investment objective, financial situation, suitability or the particular need or circumstances of any specific individual who may access or review this announcement and may not be taken as advice on the merits of any investment decision. Any person who is in any doubt about the matters to which this announcement relates should consult an authorised financial adviser or other person authorised under the UK Financial Services and Markets Act 2000. To the best of Cat Rock Capital’s ability and belief, all information contained herein is accurate and reliable, and has been obtained from public sources that Cat Rock Capital believes to be accurate and reliable. However, such information is presented “as is”, without warranty of any kind, whether express or implied. All expressions of opinion are subject to change without notice, and Cat Rock Capital does not undertake to update or supplement any of the information, analysis and opinion contained herein. This announcement, and its content, distribution and use, is subject to the terms specified at www.JustEatMustDeliver.com.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements and information that are based on Cat Rock Capital’s beliefs, as well as assumptions made by, and information currently available to, Cat Rock Capital. These statements include, but are not limited to, statements about strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements that are not historical facts. When used herein, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual results, performance or achievements may vary materially and adversely from those described herein. There is no assurance or guarantee with respect to the prices at which any securities of Just Eat, Takeaway.com, or any other company will trade, and such securities may not trade at prices that may be implied herein. Any estimates, projections or potential impact of the opportunities identified by Cat Rock Capital herein are based on assumptions that Cat Rock Capital believes to be reasonable as of the date hereof, but there can be no assurance or guarantee that actual results or performance will not differ, and such differences may be material and adverse. No representation or warranty, express or implied, is given by Cat Rock Capital or any of its officers, employees or agents as to the achievement or reasonableness of, and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects or returns contained herein. Any historic financial information, projections, estimates, forecasts, targets, prospects or returns contained herein are not necessarily a reliable indicator of future performance. Nothing in these materials should be relied upon as a promise or representation as to the future.

PERMITTED RECIPIENTS

In relation to the United Kingdom, this announcement is being issued only to, and is directed only at, (i) investment professionals specified in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”), (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities of Just Eat or any member of its group may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “Permitted Recipients”). Persons who are not Permitted Recipients must not act or rely on the information contained in this announcement.

DISTRIBUTION

Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of that jurisdiction.

Contacts

Investor Contact
Cat Rock Capital
+1 (203) 992-4630
info@catrockcap.com

Media Contact
Kepler Communications
Charlotte Balbirnie
+44 (0) 7989 528421
CBalbirnie@keplercomms.com

Contacts

Investor Contact
Cat Rock Capital
+1 (203) 992-4630
info@catrockcap.com

Media Contact
Kepler Communications
Charlotte Balbirnie
+44 (0) 7989 528421
CBalbirnie@keplercomms.com