Just Eat Takeaway shares jumped as much as 40% on Friday 19 August after the loss-making company boosted its finances by agreeing to sell its stake in Brazil's iFood to technology investor Prosus for up to €1.8 billion.
Details
The deal will give Prosus, already the majority shareholder in iFood, full control of a company seen as one of the most attractive food delivery businesses in one of the world's biggest markets.
Analysts said the cash would relieve stress on Takeaway's balance sheet as it races to achieve operating profitability by next year.
Takeaway shares were up 35% at €22.55 as of 1145 GMT on Friday 19 August, while Prosus was down 0.3% at €63.70.
"While (Takeaway) would probably rather have kept the stake, the corporate finance benefits of the sale were obviously too big to ignore," said Jefferies analyst Giles Thorne. "A clear positive for the equity."
A person familiar with the deal said the valuation of iFood, which is higher than that of publicly traded European meals delivery companies on most measures, reflected its prospects.
"First, it's a very high growth asset. And second, it's got over 80% market share in Brazil, which is an incredibly strong market position," the person said.
Prosus will pay €1.5 billion in cash and up to €300 million more for Takeaway's 33% stake in iFood, depending on the delivery sector's performance over the next 12 months.
The deal price compares with iFood's 2021 revenue of $991 million and with the $3.6 billion market capitalisation of Takeaway, Europe's largest meals delivery company.
"Increasing our stake to full ownership is a demonstration of our committed and disciplined approach to investment and reflects our confidence in the long-term potential of iFood," said Prosus Chief Executive Bob van Dijk in a statement.
Takeaway, the shares of which had lost two thirds of their value over the past year through Thursday 18 August, had long been seeking to sell the iFood stake, but had been unable to reach terms.
While they were partners in iFood, Prosus and Takeaway had fought bitterly during a 2020 takeover battle for Just Eat, which Takeaway eventually won.
Takeaway CEO Jitse Groen said in August 2021 he had turned down a €2.3 billion offer for iFood from an unidentified bidder as "inadequate", as valuations of meals companies soared in the COVID-19 pandemic.
ING Bank analyst Mark Hesselink described the price for Takeaway as "disappointing."
"The fact that there was only one real buyer for the stake (i.e. Prosus) surely did not help valuation," he said in a note.
According to Takeaway's half-year results last month, iFood made a net loss of about €120 million in the period, though revenue grew 28%.
Takeaway said it expected the deal to close in the fourth quarter and it was continuing to explore "the partial or full sale" of Grubhub, the US meals delivery company it bought last year for $7.3 billion.
Advisors
Lazard advised Just Eat Takeaway and Morgan Stanley advised Prosus.
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