You have to admire Just Eat Takeaway. The food delivery team is so excited about feeding people that they got confused and almost got eaten.
Blame the boss Jitse Groen and his voracious appetite. The Dutchman really struggled during the lockdown, gobbling up Britain’s Just Eat for £6billion as his first course, before serving up a £5.8billion takeover of US rival Grubhub months later.
But just a year after the Grubhub tie-up trumped regulators, the deal is being regurgitated amid a backlash from shareholders. Even last week’s announcement that buyers were being hastily sought for Grubhub isn’t enough to appease some.
Cat Rock, an activist with a 7% stake, is calling for the ousting of Just Eat’s chairman and chief financial officer, saying investors were misled about the company’s financial outlook when the Grubhub takeover took over. was put to the vote. Cat Rock was a key driving force behind Groen’s feeding frenzy, so his sudden hostility is quite a U-turn.
Yet this isn’t just old-fashioned indigestion brought on by a CEO whose eyes are bigger than his stomach. On the contrary, this could turn out to be the moment when the era of overpriced takeaways came to a very abrupt end. In a desperately crowded field, the food delivery app industry is among the most hyped to ever emerge from Silicon Valley. The economy is really laughable – more orders means more passengers and more costs – and many of us found the service dismal.
No wonder the big names were quick to cash in on the coronavirus-inspired boom with Deliveroo skidding into the market at a floating price that looked like it was dreamed up over a boozy lunch, around the same time Groen slipped into his buffet at will.
Yet this was always intended to be a short-lived phenomenon. Even when orders soared, profits remained largely elusive.
Now that the world is rediscovering its love for eating out, those same cold burgers and overpriced pizzas that lost their toppings in transit but sustained us during lockdown don’t look so appetizing anymore, making the economy even more difficult. It’s an industry where everyone is clearly wondering where the next meal is coming from. Valuations for the entire sector have plummeted, leaving early backers to suffer huge losses. After a brief rally in November, Deliveroo’s share price crashed 390p to 107p, a drop of 72pc.
In a bid to prove the model is more than just delivering a limp kebab to a student flat in Kings Cross after the latest orders, new sources of income are desperately sought.
Deliveroo has agreed an unlikely deal to deliver groceries to Waitrose in record time. Apparently there is a market of young, middle-class shoppers happy to part with the £2.50 delivery charge for the privilege of having an overpriced meal ready and a bottle of wine brought to the door so they don’t have to walk to the local supermarket.
Cat Rock accuses Just Eat management of wiping out $16 billion in net worth with its acquisition spree. After hitting highs of €17.4bn (£14.7bn) at the start of 2021, the company’s market value has fallen by nearly three-quarters to just €5.5bn. euros over the past 12 months after a series of downward earnings revisions.
That’s less than he paid for Grubhub, a quite remarkable exercise in value destruction.
Cat Rock says there has been a “complete loss of confidence” in the “capital allocation and financial management” of management and the supervisory board.
The fund may be right. Just Eat concedes that it “shares investors’ disappointment with the recent share price performance”. Less reassuring is the assertion that “the actions we take, including in relation to Grubhub, aim to create significant shareholder value”. The likelihood of the company recouping anything like its £5.8bn outlay seems fanciful at best.
It’s far more likely that the food delivery boom was a largely London-centric fad that has already had its day. Few people outside the capital’s metropolitan bubble will mourn his passing.
Musk pays $44 billion to make a political argument
You never get bored with Elon Musk, but how many of the world’s most influential entrepreneurs smoke weed live on TV, or accuse brave cave divers of being pedophiles, while trying to reinvent alone the automobile industry and to colonize Mars?
Despite a $230 billion fortune that makes him the richest person on this planet, Musk’s antics often look like someone who is bored or just likes to bamboozle people, but whatever the motivation, it’s quite the distraction from the day-to-day work of running Tesla.
Take his offer for Twitter, which was accepted last night following initial resistance from its board.
Few would argue that the social media platform doesn’t need new ideas. Still, it’s unclear how Musk’s pledge to promote what he describes as free speech would help. Many experts believe that one of Twitter’s main problems is that it has become infested with bots and trolls. Musk’s crusade risks allowing them to proliferate, further damaging the Twitter brand. He says he “doesn’t care about the economy,” which is probably a good thing because at $44 billion his buyout is likely to be the costliest political point ever.
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This notice was published: 2022-04-26 05:00:00