Just Eat buys rivals in €125m European takeaway

Shares in Just Eat bounced by 5.39 per cent

David Buttress, CEO of Just-Eat.co.uk (Retail Insider)

Just Eat went down a treat on Friday as the online takeaway firm swallowed four businesses for €125m (£96m) to accelerate its international expansion.

The FTSE 250 company is buying the Spanish and Italian food-delivery businesses of German start-up incubator Rocket Internet, as well as the Brazilian and Mexican divisions of foodpanda, a company backed by Rocket.

The four businesses grew orders by a combined 83 per cent last year and are expected to boost Just Eat’s underlying earnings by £10m a year by 2018. The deal, which will be funded from its cash pile, follows the £445m takeover of Australia’s Menulog last year.

Shares in Just Eat, which have crashed this year amid concerns that rivals such as Deliveroo are eating into its market share, bounced by 5.39 per cent to 379.40p.

The company’s chief executive, David Buttress, said: “This transaction reflects our ambition to make strategic, value-enhancing acquisitions. Just Eat has enhanced its market-leading positions in geographies that we understand and where our existing businesses are performing strongly.”

Nick Batram, leisure analyst at the broker Peel Hunt, said that the acquisitions “make sense”. “On the face of it, the price looks full and there is a question as to whether Just Eat might just have left the businesses to fail.

“However, we see the deals as positive, with Just Eat taking control of its own destiny. And ultimately, if £10m earnings are delivered, then the price is reasonable.”

Meanwhile, Chris Beauchamp, an analyst at the spread-better IG, said Just Eat’s share price was trading at 40 times earnings, leaving “little room for disappointment”.

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