💙 🔷 Not impressed by Big Tech in Q3? Explore these Blue Chip Bargains insteadExplore for free

UPDATE 1-Online takeaway company Just Eat buys rivals in Britain and Canada

Published 2016-12-15, 04:20 a/m
© Reuters.  UPDATE 1-Online takeaway company Just Eat buys rivals in Britain and Canada
JE
-
RKET
-

* Just Eat buys hungryhouse and SkipTheDishes

* Says deals strengthen leading position in both markets

* Shares rise to new high (Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, Dec 15 (Reuters) - Online food delivery company Just Eat JE.L has agreed to buy rivals hungryhouse in Britain and SkipTheDishes in Canada, spending more than $300 million to strengthen its leading position in both markets.

The London-listed firm said it would pay an initial 200 million pounds ($251 million) to buy hungryhouse from Delivery Hero, a Berlin-based company backed by Rocket Internet RKET.DE , plus 40 million pounds based on performance.

Hungryhouse is an online food company operating solely in the Britain. Just Eat said the deal was expected to boost its earnings per share (EPS) in the first full year of ownership.

In Canada, Just Eat said it would pay an initial C$110 million ($66 million) for SkipTheDishes, a delivery service focused on lower density metropolitan and suburban areas which has 2,900 restaurants listed and 350,000 active customers.

Just Eat said it expected the deal, net of one-off exceptional costs, to moderately weigh on EPS in 2017 and 2018 before boosting earnings thereafter.

Shares in Just Eat, which listed in 2014, rose to a new high of 623.5 pence on Thursday after the deals were announced and were 2.3 percent higher at 611 pence at 0905 GMT.

Chief Executive David Buttress said the two transactions would help the company build its presence in two key markets.

He said he was confident the British deal would be approved by competition authorities, despite analysts saying the deal would bring together the first and second ranked players.

"We think this brings benefits to both restaurants and consumers rather than diminishing them," he said.

Jefferies analyst David Reynolds, who has a "buy" rating on the company, said the British deal "made absolute sense" strategically and was "reasonably priced", with the price representing about 16 times expected 2017 core earnings.

"Whilst it may be some time before the CMA (Competition and Markets Authority) bless this deal, the strategic imperative for Just Eat makes sense, the consideration seems reasonable and we do not underestimate the importance of Just Eat taking hungryhouse off the table," he said.

($1 = 0.7973 pounds) (Editing by David Clarke)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.