A Just Eat investor has penned an open letter urging the food delivery company to initiate merger discussions following the departure of its CEO.
Investment firm Cat Rock's open letter to Just Eat's board of directors described Peter Plumb's sudden departure last month after just over a year as a "failed appointment" and expressed "deep concern" regarding the board's appointment of "executives who lack online food delivery experience to critical roles at the company".
Cat Rock, which owns 13 million shares in the food delivery company, argued that a merger with an industry peer would be a better outcome for shareholders than relying on the board to choose a new CEO, "particularly given the Board's poor record of CEO selection".
The letter said "recent developments have made it clear that the Board is squarely on the path to repeat the serious mistakes that led to Mr. Plumb's appointment"and concluded that a merger would be "the best way for Just Eat to secure the management talent and delivery expertise it needs to compete".
Cat Rock added that if the board fails to "seriously explore" a merger, it intends to "take further action" in advance of the Annual General Meeting scheduled for 1 May 2019.
Alex Captain, founder and managing partner of Cat Rock Capital Management, said: "Just Eat is a high-quality business with fantastic growth prospects. As long-term shareholders with significant experience in this sector, we are keenly focused on ensuring that the board pursues the best path for the company and its shareholders.
"The board's experiment of appointing an industry outsider like Mr. Plumb to the CEO role failed miserably and destroyed shareholder value. Now Just Eat needs a world-class management team with online food delivery experience and proven delivery capabilities. A merger is an obvious path for securing these advantages for the company.
"We believe that there would be significant strategic interest from other industry participants and therefore urge the board to swiftly and seriously engage in good-faith merger discussions to create substantial value for all Just Eat shareholders."
A Just Eat spokesperson said: "We take communications with all our shareholders extremely seriously. As announced previously, we are carrying out a thorough CEO appointment process and we will update the market as appropriate."Get The Caterer every week on your smartphone, tablet, or even in good old-fashioned hard copy (or all three!).