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Just Eat, considering Grubhub’s sale or spin off in the USA

Just Eat (JET) Board could be considering the sale or spin off of its Grubhub 24h delivery service and business delivery service in the USA, to focus in the same day delivery market inside Europe.

At least this is the propposal of Cat Rock Capital Management LP one of the shareholders of Just Eat (JET), who currently owns 14.0 million shares in the capital of the company, representing circa 6.5% of Just Eat Takeaway.com’s outstanding shares. Total shares in use at the food delivery multinational total 212.62 million.
Amazon.com, Walmart, Target/Shipt, Instacart, and Kroger could be among the companies In the list of logical interested purchasers in Catrocks capital view.

Grubhub sale or spinoff was propposed for the first time by Cat Rock Capital on its letter to JET Board dated 25th October 2021. On this letter, the date to annonunce the sale or spinoff operation was initially set on 31st December 2021.

Since Grubhub purchase just 17 months ago, JET stock has underperformed the MSCI World Index by a remarkable 69% and this deepp undervaluation of the shares of the company poses a real risk to JET’s business, limiting its financial and strategic flexibility, inviting competitors to invest in its markets, and leaving the Company vulnerable to takeover bids well below its long-term intrinsic value . This is reason why the sale or spinoff of Grubhub is propposed by Cat Rock Capital.

As of November 2021 Grubhub’s market capitalisation is valued at $15.47Bn (down 4.03Bn from the 19.5Bn reached in 2ndQ 2021).
Just Eat Take Away market capitalisation as of 10th November 2021 is valued at $10.5Bn (down $10.04Bn from the $20.54Bn peak reached on 3rd September this same year).

Selling or consolidating the US business to focus on same day delivery in Europe

Alex Captain, Founder and Managing Partner, Cat Rock Capital Management LP, commented: “As one of Just Eat Takeaway.com’s largest and longest-standing shareholders, we shared our view last month that JET should refocus its business on Europe and unlock the significant value of Grubhub through consolidation with a US-focused company.

“Since sharing our views last month, we have had a productive dialogue with JET management. We agree with the Company’s intention to participate in US consolidation and favor timely action that refocuses JET on its enormous European same-day delivery opportunity.

“Today, we are sharing our research on the significant strategic opportunities for Grubhub publicly for the benefit of JET’s shareholders and Board. Cat Rock has spent over six years researching the online food delivery sector and has been a shareholder of JET and its predecessor companies for over four years. Our views on JET’s strategy reflect our enthusiasm for the Company’s long-term prospects and value assuming focused execution and pragmatic strategic action.
“Same-day delivery is the future of e-commerce globally. In the US alone, same-day delivery has a $2.6 trillion addressable market and has been growing at 79% per year since 2017″.

Allways speaking on behalf of Cat Rock Capita, Captain added: “The pace of change in online food delivery is staggering, particularly as the COVID-19 pandemic altered consumer behavior and unlocked enormous new market opportunities. JET should adapt its strategy to the changes that have occurred in the 17 months since announcing the Grubhub deal, which have increased the strategic value of same-day logistics platforms and expanded the addressable market for online food delivery.

“We believe Just Eat Takeaway.com should act expeditiously to refocus its business on Europe, where it is the clear market leader in online food delivery and best-positioned to capture the incredibly large same-day delivery opportunity.

“We welcome continued dialogue with Just Eat Takeaway.com’s Board and shareholders regarding our research and perspectives. With focused execution, JET will be the future of same-day delivery in Europe, and we could not be more excited about the Company’s prospects.”

Attractive for a long list of probably interested buyers

Grubhub has significant intrinsic and strategic value to a long list of logical owners and Alex Captain, Founder and Managing Partner, Cat Rock Capital Management LP named just some few: “Grubhub is one of only four scaled independent same-day delivery networks in the United States, which gives it significant strategic and intrinsic value. Today, Grubhub has over 32 million customers generating $10Bn of sales, a partner base of over 300,000 restaurants, and a logistics network consisting of 200,000 couriers delivering $7Bn of food across over 4,000 cities.

“Same-day delivery allows physical retailers to offer faster delivery times than traditional e-commerce players, making them far more competitive as consumers increasingly shop online.

“Grubhub’s same-day logistics network across over 4,000 US cities has incredible value to a broad range of e-commerce and physical retailers,including Amazon.com, Walmart, Target/Shipt, Instacart, and Kroger, among others. Moreover, Grubhub’s restaurants and customers also have significant value to a broad range of US-focused technology companies like Uber, Lyft, Booking.com, Square, and Toast.”

Other sales to consider in the horizon?

Should the company finally decide following Cat Rock Capital propposal to focus in becoming the leader in same day delivery inside Europe, Just Eat could perhaps think about selling other affiliates operating in markets not located inside Europe, like Canada or Mexico.

Just Eat affiliates include : Just Eat Takeaway N.V.; Grubhub; Foodora; Menulog; Delivery Hero Germany; Takeaway payments; SkipTheDishes (Canada); Lieferservice; City Pantry Ltd.; WEBS srl; 10bis.Co.ll Ltd (Israel); UitgeverijHapGids; UitgeverijHapGids; foodarenaAG; Flypay Limited; JEB srl; Just Eat Spain S.L.; Eat.ch GmbH; Filmybelly Ltd.; Clicca e Mangia; Orogo Limited; Practi Technologies; Menulog Group Limited; SinDelantalInternet S.L.; Hungryhouse Holdings; Hello Hungry AD; FBA Invest SaS; Just Eat Canada Inc.(Canada); Bistro.sk a.s.; Eatcity Limited; Just eat Belgie Bvba; Grupo Yamm comida a domicilio; Just eat co. uk Ltd; Eatstudent Limited; TTT SAS; SinDelantal.MX (Mexico); Nifty Nosh Limited; Inversiones Hellofood, S. de R.L. de C.V.

Image over the headline.- Just Eat rider.© Just Eat

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