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Just Eat boosts global presence with four online takeaway deals

[LONDON] Just Eat agreed to buy four online-takeaway food businesses from Rocket Internet as the British company looks to expand beyond its increasingly-crowded home market.

The UK's largest online takeaway marketplace will purchase La Nevera Roja in Spain, hellofood Italy, hellofood Brazil and hellofood Mexico for a total of 94.7 million pounds (S$193 million). Just Eat already operates in those countries, having just entered Mexico last year. The stock rose as much as 5.2 per cent in early London trading.

The deals are the latest chapter of Just Eat's rapid international expansion as the company moves beyond the UK, and Denmark, where it first started operations in 2001. Competition in the fast-growing online takeaway market is heating up, prompting some analysts to downgrade Just Eat's shares. Rocket Internet partly owns Just Eat's rival Delivery Hero, which it plans to float on the stock exchange this year.

"We expect this to strengthen the group's position in these markets, and provide greater assurance that the group can deliver scale benefits," said David Amiras, an analyst at Canaccord Genuity.

Just Eat trades on 37.5 times its estimated earnings over the next 12 months, despite falling 27 per cent so far this year, according to Bloomberg data. GrubHub Inc, a US rival, trades on 29 times estimated earnings.

In aggregate, the acquired businesses grew orders by 83 per cent in 2015, Just Eat said. The Borehamwood, England-based company expects the acquisitions to increase its earnings before interest, tax, depreciation and amortisation by 5 million pounds in 2017 and by 10 million pounds in 2018. Just Eat is scheduled to report full-year results March 1.


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