Shares in Just Eat (JE.L) surged by as much as 30% on Monday after Takeaway.com (TKWY.AS) confirmed that talks about a takeover of the London-based online food delivery firm were “at an advanced stage.”
Both companies said in a statement that they had “reached an agreement in principle” on the key terms of the potential deal, which would create one of the largest food delivery giants in the world.
The all-share deal would see the Amsterdam-based Takeaway.com acquire Just Eat for 731p a share, a 15% premium on Friday’s closing price — creating a company with roughly 360m global takeaway orders, worth nearly £7bn.
Shares in Takeaway.com were up by more than 3% on Monday.
While the companies already operate in more than 20 countries, including the UK, Ireland, Australia, Brazil, Mexico, Germany, and Israel, there is little geographical overlap between the two companies.
Just Eat is currently in a heated battle in the UK with Deliveroo and Uber Eats. Amazon in May announced a £575m investment in Deliveroo, but that deal has been put on hold pending an inquiry by the competition watchdog.
Under the proposed deal, which would be structured as a takeover of Just Eat by Takeaway.com, Jitse Groen, the current Takeaway.com CEO, would become CEO of the combined group, with the companies splitting several other positions.
Just Eat chief financial officer Paul Harrison would be the only executive from the London-based firm that would serve on the new company’s management board, however.
Discussions, the two companies said, “remain ongoing”. They noted that Takeaway.com has until 24 August to announced a firm intention to make an offer for Just Eat.
The announcement comes after sustained pressure from activist investor Cat Rock Capital for Just Eat to combine with a rival delivery firm.
Cat Rock Capital “will be smiling like a Cheshire cat this morning,” said Russ Mould, investment director at AJ Bell, in a note.
“Takeaway.com has previously signalled that it wanted to consolidate the market and that it considered the UK to be one of the most attractive markets in Europe,” Mould said.
“It may be no surprise that Cat Rock also has a stake in Takeaway.com so may have played cupid and set up the pair on a blind date.”