Daily Management Review

Doubts Over Grubhub Acquisition Tanks Just Eat Takeaway Shares To All Time Low


Shares in Europe's largest online meal ordering company, Just Eat Takeaway.com, fell to an all-time low on Wednesday, as investors questioned if the loss-making company will be able to sell its U.S. Grubhub subsidiary and attain profitability without extra capital.
Following a note by Berenberg analysts commencing coverage with a "Sell" rating, shares fell 19 percent to 14.68 euros. Analysts questioned if the business could sell Grubhub for anything close to the $5.8 billion it spent for it in an all-shares deal that concluded in June 2021.
In response, Just Eat Takeaway stated that it has not modified its strategy with regard to Grubhub and that its funding is secure.
According to the company, Takeaway is "currently exploring...a strategic collaboration and/or the sale of Grubhub, in whole or in part."
"Just Eat Takeaway has a strong cash base to finance its business plan."
Shares are down 70  per cent this year, and CEO Jitse Groen has come under fire from investors, notably its second-largest stakeholder, Cat Rock, for the Grubhub acquisition. Groen, Takeaway's creator, changed his mind in April 2022 and stated that he was considering selling the company. 
"On our estimates, the company would need to raise around 1 billion in new funding to achieve free cash flow break-even" if it does not successfully sell Grubhub or other assets, the Berenberg analysts wrote.
"We estimate that the disposal of Grubhub could bring in a net $400 million ... but this still means a need for over 500 million euros in new funding."
Another reason hurting on shares was a Wall Street Journal report citing comments by Grubhub CEO Adam DeWitt that a sale of the segment is not likely.
Takeaway reported a more than 1 billion euro deficit in 2021, while Groen has stated that it is on track to become operationally profitable in 2023.
On Wednesday, the business stated that its debt is "fully matched with the expected profitability gains."