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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

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/

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/