TCEHY Tencent Holdings Ltd (PK)

By Parmy Olson and Alexandra Wexler 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 23, 2019).

A newly formed tech-investment giant in Europe made its first big move, launching a GBP4.9 billion ($6.3 billion) offer for Just Eat PLC and challenging the global food-delivery ambitions of the likes of Amazon.com Inc. and Uber Technologies Inc.

The all-cash offer from Prosus NV, which owns a near-third stake in Chinese internet giant Tencent Holdings Ltd. and a host of other tech assets, is the investment firm's first major move since South Africa's Naspers Ltd. separately listed its international internet assets last month.

Prosus said Tuesday that it would put its proposal directly to Just Eat's shareholders within the next 28 days, gate-crashing the British delivery company's planned merger with Dutch rival Takeaway.com NV.

Prosus said its offer of 710 pence a share is 20% higher than Takeaway.com's all-share bid made in July, based on the latter's closing price Monday.

Just Eat urged shareholders to reject Prosus' offer, saying it undervalued the company and its prospects whether on a stand-alone basis or as part of a merger with Takeaway.com.

Shares in Just Eat traded 24% higher on Tuesday.

The move by Prosus marks the latest sign of growing interest in food delivery. The sector has been heating up as such businesses gain popularity as an easy way to order meals from restaurants via a smartphone.

Earlier this year, Amazon led a $575 million investment round into Deliveroo, one of the U.K.'s leading food-delivery companies, going head to head with Uber Eats. Amazon's investment is now being reviewed by competition regulators.

Food-delivery services are battling fiercely for consumers in various markets, including in Britain where Just Eat is a major player. In some cases, operators are striking partnerships. In 2014, Just Eat invested in Brazil's iFood -- which is also backed by Prosus -- and integrated its operations in Brazil.

Prosus, one of the world's largest technology-investment firms, said it had already spent $2.8 billion across several investments in food delivery, including Germany's Delivery Hero, India's Swiggy and iFood. Online food delivery is one of Prosus' three key areas of investment focus, along with online classifieds and payments.

It said Just Eat needed more investment than planned by its management to defend itself from "intense competition," noting the delivery company's recent trading update had shown slower order growth.

Should it be successful in its bid for Just Eat, Prosus would have a food-delivery presence in more than 50 markets, with a leading position in more than 40 of these, Prosus Chief Executive Bob van Dijk said on a call with reporters.

"Food delivery is a space that we know well...and that we're committed to for the long term," Mr. Van Dijk said.

Prosus said it had approached Just Eat's board of directors with several proposals, but hadn't so far reached an agreement. "Prosus is making this announcement in order to give Just Eat shareholders the opportunity to consider the offer," the company said.

Just Eat quickly announced on Tuesday that it had rejected the approach, and that it favored its planned tie-up with Takeaway.com, which it said would allow both groups to bolster their competitive positions.

That deal was supported Tuesday by one of Just Eat's largest shareholders, Cat Rock Capital Management. The investment firm said Prosus' offer "dramatically undervalued" Just Eat because -- unlike the Takeaway.com all-share deal -- it wouldn't allow investors to benefit from the company's future opportunities. Cat Rock holds about 3% of Just Eat's shares.

However, the planned merger has faced criticism from other Just Eat shareholders. Eminence Capital, a New York-based hedge fund that owns a 4.4% stake in Just Eat, said in September that it would vote against the Takeaway.com deal, calling the financial terms "grossly inadequate." Eminence Capital couldn't be reached for comment Tuesday.

Prosus was listed in Amsterdam in September to unlock value for Naspers shareholders and attract new investors. Naspers, which owns a majority stake in Prosus, had long traded at a discount to the value of its assets. As well as its stake in Tencent, Prosus has investments in Russian social-media operator Mail.ru Group Ltd. and U.S. online marketplace LetGo -- a Craigslist Inc. competitor -- among others.

Write to Parmy Olson at parmy.olson@wsj.com and Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

October 23, 2019 02:47 ET (06:47 GMT)

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