Cat Rock Capital Management, which owns approximately 4.7% of Just Eat Takeaway.com's outstanding shares, has issued a presentation in which it says the company's failure to communicate with investors and the markets since its IPO has left it "deeply undervalued and vulnerable to takeover bids at far below intrinsic value".
Although Cat Rock said it was pleased with Just Eat Takeaway.com's operational performance under chief executive Jitse Groen and his team, it had been "deeply disappointed by the company's poor handling of its relationship with investors", which it said had made it "the worst-performing online food delivery stock over the past two years despite strong operational performance".
Just Eat Takeaway.com's share price has declined 11% over the past two years even as its gross merchandise value (GMV) has grown over 100%. It said the company's valuation had dropped approximately 75% since 2019.
It also said the company had not been transparent in communicating the costs of its investments and the corresponding short-term impact on earnings, which had undermined its credibility with the market, as well as publicly criticising the potential of businesses it is actively investing in, such as logistics and grocery delivery, causing "immense confusion and misunderstanding".
The presentation said it had "bizarrely insisted that logistics and grocery will never achieve profits in Europe, even as it invests aggressively in logistics and enters the grocery market. Investors therefore naturally give JET no credit for these attractive and fast-growing businesses… [its] effort to dampen investor enthusiasm for logistics- and grocery-based competitors has completely backfired, leaving the company in the awkward position of downplaying the long-term profit potential of its own investments".
Cat Rock also accused Just Eat Takeaway.com of failing to address competitor attacks and correct misinformation on its operational acumen after competitors branded it as "a marketing company with poor technology".
Cat Rock has called on Just Eat Takeaway.com to provide investors with transparency on the expected magnitude, composition and returns of its investments; to "aggressively address and exploit the deep undervaluation of its equity" by selling non-core assets, using the proceeds to invest in its growth and repurchase the shares issued in the Grubhub transaction; and explore strategic combinations with other global players.
Alex Captain, founder and managing partner at Cat Rock Capital, said: "Just Eat Takeaway.com is a fantastic business with number one positions in many of the world's most valuable online food delivery markets and a long runway for growth.
"However, JET has failed to upgrade its communications with investors and the markets since IPO, leaving it deeply undervalued and vulnerable to takeover bids at far below intrinsic value.
"JET can quickly and materially improve its standing in the capital markets by improving transparency, selling non-core assets and exploring strategic options to strengthen the business and generate significant shareholder value.
"We remain incredibly excited about JET's prospects and look forward to continued engagement with management and shareholders to help the company achieve its great potential."
A Just Eat Takeaway.com spokesperson said: "Just Eat Takeaway.com has a regular dialogue with all its shareholders and we take all their views very seriously. As announced previously, we will be hosting a capital markets day in October to provide the market with increased visibility on how we will capitalise on the exciting, long-term growth opportunities that we have across our business."