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The European Commission has approved the €4.1bn takeover of Just Eat Takeaway by Prosus, after the technology investment group offered to make significant concessions in order to gain permission for the food-delivery deal.
Approval from Brussels removes the last major hurdle to the Netherlands-based group completing a deal that is key to Prosus’s goal of creating a “European tech champion”, at a time when its Silicon Valley rival DoorDash is also acquiring Just Eat’s UK-based competitor Deliveroo.
The commission said that approval was “conditional upon full compliance with the commitments” offered by Prosus, the investment arm of South African group Naspers.
Antitrust regulators had been concerned that the deal would have reduced the incentive for Just Eat to compete with Delivery Hero — another of the world’s biggest food delivery groups, in which Prosus is the largest shareholder — potentially driving up prices for consumers.
To win clearance, Prosus has agreed to sell down its 27 per cent stake in Berlin-based Delivery Hero. Prosus’s head of investments, Fahd Beg, told the Financial Times it would reduce its stake to a “single-digit” percentage within 12 months, relinquishing its status as Delivery Hero’s largest shareholder.
Beg also confirmed that Prosus would not “recommend or appoint” any future individuals to Delivery Hero’s board, with its existing board member set to resign “immediately”. He added that Prosus would evaluate its options for the disposal of its stake.
Investment group Baillie Gifford is at present the second-largest shareholder in Delivery Hero, holding a 4.9 per cent position, according to Bloomberg data. For Prosus to reduce its stake to below that of Baillie Gifford, it would have to sell more than 22 per cent of Delivery Hero’s shares, a stake that is worth more than €1.6bn.
Prosus originally agreed to acquire Just Eat in February, paving the way for one of Europe’s leading food delivery groups to be delisted from public markets after a tumultuous few years of trading.
The concessions were agreed after EU officials had raised concerns regarding Just Eat competing in the same markets as Delivery Hero’s subsidiary Glovo, such as Spain, Poland and Italy.
Analysts have suggested that Prosus’s future dealmaking plans might also involve the acquisition of Delivery Hero, which owns brands such as Foodpanda and Talabat.
Beg declined to comment on Prosus’s future M&A ambitions after the Just Eat deal is completed, which is expected to come soon after the offer period closes on October 1.
Prosus, which also owns Brazilian food delivery company iFood, said it hoped to transform Just Eat through the rollout of further artificial intelligence, while diversifying away from the simple food delivery model.
“We believe that there’s a large opportunity in adjacencies beyond food, which iFood has done a tremendous job of capturing,” Beg said, such as groceries and fintech. “And we believe that can be implemented at Just Eat as well . . . There’s a lot of work going around how we can take what is largely a food delivery business today and make it more of a platform.”
The deal comes at a time of wider consolidation within the global food delivery sector. Silicon Valley-based DoorDash announced its deal to acquire Deliveroo in May, after New York’s Wonder bought Grubhub from Just Eat last year.
“There’s clearly a trend to consolidation,” Beg said. “If you look at the playbook it takes to win in this business . . . those playbooks can largely be replicated across markets.”
Thomas Nienaber, managing director at MKP Advisors, said the decision by Prosus to sell down its Delivery Hero stake was an “obvious quick fix to any competition issues”.
“All other avenues looked fraught with issues, were not easy to resolve and cost time — something Prosus does not seem to have, especially with DoorDash overtaking on the left with its acquisition of Deliveroo completing shortly.”
Additional reporting by Alice Hancock in Brussels