JUST EAT plc (“JUST EAT” or the “Company”), the world’s leading online and mobile marketplace for takeaway food, announces the proposed acquisition of the entire issued and outstanding capital stock of Menulog Group Limited (“Menulog”) for a total cash consideration of A$855 million (£445 million)(the “Acquisition”) to be financed from the proceeds of an issue of new equity.
Menulog is the market leader in the Australian and New Zealand online takeaway marketplace. It has a selection of more than 5,500 unique restaurants and 1.4 million active consumers. Menulog has seen rapid growth in order volume with the business achieving year-on-year order volume growth of 96% for the three months ended 31 March 2015.
The JUST EAT Directors believe there is a compelling rationale for the acquisition of Menulog which will allow it to acquire a market leader in a market of significant scale.
Strategic rationale
– Access to a market of significant scale:
– The Australian and New Zealand takeaway delivery market size is estimated at c.A$3.0 billion (c.£1.6 billion), with online penetration rate estimated at c.22%
– The Australian and New Zealand markets are structurally very similar to that in the UK and are therefore markets in which aggregators should thrive
-These markets have: a strong takeaway food culture, a fragmented restaurant market, high levels of disposable income and a high level of ecommerce adoption
– Market leadership:
– Menulog is the market leader in the Australian and New Zealand online takeaway marketplace3
– The transaction adds another two markets to those where JUST EAT has the #1 market leadership position
– Strong underlying business:
– Broadly similar business model to JUST EAT with an average commission rate of 9.8% for the twelve months ended 31 March 2015
– Significant growth across all key metrics
– Menulog generated 6.3 million orders for the twelve months ended 31 March 2015. In the three months ended 31 March 2015, orders were over 1.8 million, growing 96% year-on-year.
– Experienced management team:
– Menulog has an experienced local management team, led by Dan Katz and Matthew Dyer, with a demonstrated track record of success in Australia and New Zealand. The management team is committed to remaining with the business.
Financial rationale
– Menulog generated £13.5 million of revenues and £1.2 million of EBITDA during the twelve months ended 31 March 2015 and is growing rapidly, with 96% year-on-year order growth for the three months ended 31 March 20157
– Significant upside potential from EBITDA margin expansion
– Creates a group with over 67 million orders per annum and growing rapidly
– Strong operational leverage and cash conversion
– Transaction is expected to be EPS accretive in first full year of ownership
– Cost and revenue synergies through leveraging JUST EAT’s proven expertise and know-how to drive further growth and efficiency
Equity fundraising
The Acquisition is classified under the Listing Rules as a Class 2 transaction and accordingly a shareholder vote is not required. It is currently expected that the consideration will be 100% financed from a proposed equity fundraising in the form of a placing and open offer (the “Equity Fundraising”). With respect to the Equity Fundraising, JUST EAT has entered into a standby underwriting agreement with J.P. Morgan Cazenove pending the launch of the Equity Fundraising and publication of the Prospectus.
The Equity Fundraising is expected to be launched in mid to late May, following receipt of the approval of the Acquisition by the Foreign Investment Review Board (“FIRB”) in Australia. Completion of the Equity Fundraising is expected early to mid June 2015.
Further details in relation to the Acquisition and Equity Fundraising will be set out in the Prospectus which shall be published in due course subject to receipt of approval from FIRB. Please also refer to the Important Notice in Appendix I to this announcement.
Further information
David Buttress, Chief Executive Officer of JUST EAT plc commented:
“Since the time of our IPO last year, we have consistently stated that participating in a disciplined manner in industry consolidation was an important strategic objective for JUST EAT. The acquisition of Menulog, a business with strong leadership in an attractive and fast-growing market, is fully consistent with this approach and will be an important addition to the JUST EAT business. The Menulog founders have together built a great business and I look forward to working closely with Menulog’s CEO and his experienced management team in the coming months.”
Also commenting on the Acquisition, Dan Katz, Chief Executive Officer of Menulog, said:
“I am very excited about the prospect of Menulog becoming part of JUST EAT, which has been a real inspiration for us as we have grown in the Australian and New Zealand markets. This proposed acquisition will allow Menulog to benefit from JUST EAT’s experience and know-how, particularly in digital marketing, and enhance our customer service model to drive further growth and efficiencies across the business.”
J.P. Morgan Cazenove (as defined in Appendix II) is acting as Sole Financial Adviser in relation to the Acquisition, sponsor and bookrunner in relation to the Equity Fundraising and Corporate Broker to JUST EAT.
