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It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B USD. How does an all stock acquisition of 7.3B USD work in this case? Is this done

by tybit 6y ago

It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B USD. How does an all stock acquisition of 7.3B USD work in this case? Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar?

hayksaakian 6y ago
1 example: they could take on debt from a Bank to make the purchase for example. "Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon. Mr. Groen, a Dutch entrepreneur, founded Takeaway.com in 2000 when he was a student frustrated with the challenge of ordering pizza online. He took Takeaway.com public in 2016, and now has a net worth of more than $1.5 billion, according to Forbes. In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German portion of Delivery Hero’s business for about $1 billion in 2018." They've been aggressively acquiring competitors for years, so this seems par for the course.
- grayfaced 6y ago
  I don't get it. Why would a bank loan billions to a company losing money, so they can acquire another company losing money? The bank takes all the risk for little return. At what point should the bank just become an investor.
  - jessaustin 6y ago
    Well probably the only "bank" involved was an investment bank. Typically they would issue bonds rather than taking out a mortgage. Some investors like the risk available with such corporate bonds. Although this may not be a LBO situation, selling junk bonds is often the way that PE firms steal everything from firms they "buy". I have no idea how the "all-stock" claims jive with selling bonds. I suppose the buyer could just issue more of its own stock, if the numbers don't add up. [EDIT:] This last maneuver seems more plausible if the buyer itself was previously a LBO target and the PE dudes haven't totally drained it yet.
- whack 6y ago
  > 1 example: they could take on debt from a Bank to make the purchase for example. How is taking on debt, relevant to an all-stock deal? An all-stock deal means that Grubhub shareholders aren't receiving any cash, they are receiving $7.3B worth of JustEatTakeaway stock. The only interpretation I can think of, is what the previous poster said - the existing shareholders of JET are getting significantly diluted
  - hayksaakian 6y ago
    Right, I was just giving an example of how a smaller company can buy a larger company
- saos 6y ago
  Yup you are absolutely spot on. Just Eat also acquired City Pantry last year. They have certainly been aggressive in acquisitions. It's just seems like a game of marketshare domination to me. https://techcrunch.com/2019/07/12/city-pantry-acquired/ https://techcrunch.com/2019/07/12/city-pantry-acquired/
viscanti 6y ago
They're getting stock in a post-acquisition combined entity. So a better way to think of it is they get 52% of the combination of both companies (which makes it weird to think they're the ones getting acquired - but that has to do with which entity ends up being the controlling entity).
- replyguy912 6y ago
  this is just a more honest merger. Someone is always getting acquired, in this case they're upfront about who has post-deal control.
adventured 6y ago
It's not a $7.3 billion acquisition. It's roughly a $6b to $6.1b acquisition (and Just Eat's market cap is now around $7.75 billion USD). The value of the acquisition has changed. Just Eat Takeaway is an NV / Dutch firm (also mentioned on their Wikipedia page [1]), here's their listing: https://www.cnbc.com/quotes/?symbol=TKWY-NL https://www.cnbc.com/quotes/?symbol=TKWY-NL I believe they're legally based in the Netherlands after the combination between Just Eat and Takeaway, and trade on both the Euronext exchange in Amsterdam and London Stock Exchange. Here is how it's structured (from the Wall Street Journal): "Grubhub shareholders would receive 0.6710 Just Eat share for each Grubhub share, now worth just over $65 / share after a decline in Just Eat shares Wednesday" Here's what Business Insider quoted previously: "Under the terms of the stock-swap deal, Just Eat is offering roughly 0.67 of its shares for every Grubhub share for an implied value of $75.15 per share, or $7.3 billion based on Tuesday's closing price, according to the statement." Notice that $75 / share figure, at $7.3 billion, is prior to the drop in Just Eat's stock. The new $65 / share figure quoted by the Wall Street Journal is based on the change in the stock price of Just Eat, which plunged from roughly €100 to €85. If Just Eat's shares continue to decline in value, GrubHub shareholders still receive the same share ratio (valuing the deal at a lower figure accordingly). [1] https://en.wikipedia.org/wiki/Just_Eat_Takeaway https://en.wikipedia.org/wiki/Just_Eat_Takeaway
dehrmann 6y ago
> Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar? While it sounds like they're not doing this, yes, you can do this.
replyguy912 6y ago
pretty much like you've described. When you're making up the valuation and spending your own currency there's no problem; you control both sides of the balance sheet

by tybit 6y ago

hayksaakian 6y ago

1 example: they could take on debt from a Bank to make the purchase for example. "Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon. Mr. Groen, a Dutch entrepreneur, founded Takeaway.com in 2000 when he was a student frustrated with the challenge of ordering pizza online. He took Takeaway.com public in 2016, and now has a net worth of more than $1.5 billion, according to Forbes. In addition to the deals for Grubhub and Just Eat, Mr. Groen bought the German portion of Delivery Hero’s business for about $1 billion in 2018." They've been aggressively acquiring competitors for years, so this seems par for the course.

grayfaced 6y ago
I don't get it. Why would a bank loan billions to a company losing money, so they can acquire another company losing money? The bank takes all the risk for little return. At what point should the bank just become an investor.
- jessaustin 6y ago
  Well probably the only "bank" involved was an investment bank. Typically they would issue bonds rather than taking out a mortgage. Some investors like the risk available with such corporate bonds. Although this may not be a LBO situation, selling junk bonds is often the way that PE firms steal everything from firms they "buy". I have no idea how the "all-stock" claims jive with selling bonds. I suppose the buyer could just issue more of its own stock, if the numbers don't add up. [EDIT:] This last maneuver seems more plausible if the buyer itself was previously a LBO target and the PE dudes haven't totally drained it yet.
whack 6y ago
> 1 example: they could take on debt from a Bank to make the purchase for example. How is taking on debt, relevant to an all-stock deal? An all-stock deal means that Grubhub shareholders aren't receiving any cash, they are receiving $7.3B worth of JustEatTakeaway stock. The only interpretation I can think of, is what the previous poster said - the existing shareholders of JET are getting significantly diluted
- hayksaakian 6y ago
  Right, I was just giving an example of how a smaller company can buy a larger company
saos 6y ago
Yup you are absolutely spot on. Just Eat also acquired City Pantry last year. They have certainly been aggressive in acquisitions. It's just seems like a game of marketshare domination to me. https://techcrunch.com/2019/07/12/city-pantry-acquired/ https://techcrunch.com/2019/07/12/city-pantry-acquired/

viscanti 6y ago

They're getting stock in a post-acquisition combined entity. So a better way to think of it is they get 52% of the combination of both companies (which makes it weird to think they're the ones getting acquired - but that has to do with which entity ends up being the controlling entity).

replyguy912 6y ago
this is just a more honest merger. Someone is always getting acquired, in this case they're upfront about who has post-deal control.

adventured 6y ago

It's not a $7.3 billion acquisition. It's roughly a $6b to $6.1b acquisition (and Just Eat's market cap is now around $7.75 billion USD). The value of the acquisition has changed. Just Eat Takeaway is an NV / Dutch firm (also mentioned on their Wikipedia page [1]), here's their listing: https://www.cnbc.com/quotes/?symbol=TKWY-NL https://www.cnbc.com/quotes/?symbol=TKWY-NL I believe they're legally based in the Netherlands after the combination between Just Eat and Takeaway, and trade on both the Euronext exchange in Amsterdam and London Stock Exchange. Here is how it's structured (from the Wall Street Journal): "Grubhub shareholders would receive 0.6710 Just Eat share for each Grubhub share, now worth just over $65 / share after a decline in Just Eat shares Wednesday" Here's what Business Insider quoted previously: "Under the terms of the stock-swap deal, Just Eat is offering roughly 0.67 of its shares for every Grubhub share for an implied value of $75.15 per share, or $7.3 billion based on Tuesday's closing price, according to the statement." Notice that $75 / share figure, at $7.3 billion, is prior to the drop in Just Eat's stock. The new $65 / share figure quoted by the Wall Street Journal is based on the change in the stock price of Just Eat, which plunged from roughly €100 to €85. If Just Eat's shares continue to decline in value, GrubHub shareholders still receive the same share ratio (valuing the deal at a lower figure accordingly). [1] https://en.wikipedia.org/wiki/Just_Eat_Takeaway https://en.wikipedia.org/wiki/Just_Eat_Takeaway

dehrmann 6y ago

> Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar? While it sounds like they're not doing this, yes, you can do this.

replyguy912 6y ago

pretty much like you've described. When you're making up the valuation and spending your own currency there's no problem; you control both sides of the balance sheet