Just Eat Takeaway investors should vote to fire board, says activist shareholder | Services sector

Just Eat Takeaway’s largest independent shareholder has said investors should vote to fire the takeaway food website’s supervisory board and chief financial officer amid a steady decline in its market value.

Cat Rock Capital, a Connecticut-based activist investor, said in an open letter published on Monday that Just Eat had “torpedoed the company’s share price by providing a misleading outlook” before its $7.3bn (£5.7bn) takeover of rival Grubhub in a deal struck in 2020.

The food delivery industry expanded massively during the coronavirus pandemic lockdowns, and Jitse Groen, the founder of the Dutch Takeaway.com, tried to grow the company through two large deals.

The Amsterdam-listed Just Eat Takeaway (JET) was formed in 2020 through the merger of Takeaway.com and its British rival Just Eat. It then bought Grubhub to give the company access to the huge US market, but the company last week appeared to accept the deal was an error after saying it was looking for a “strategic partner” or a sale.

Just Eat Takeaway’s market value rose as high as €17.4bn (£14.7bn) in early 2021, before a series of profit downgrades led to a sell-off that prompted its value to fall to €5.5bn on Monday.

Cat Rock said that the company had “destroyed” €16bn in equity value because of a “complete loss of trust in the management and supervisory boards’ capital allocation and financial management”.

The investor, which owns a 6.9% stake with 14.8m shares, said it will vote against a series of shareholder resolutions at the annual meeting in Amsterdam on 4 May. They include voting against the supervisory board, the re-election of the chief financial officer, Brent Wissink, and the authority of the board to issue new shares. It also said it will abstain in a vote on Groen, who is JET’s chief executive and its largest shareholder, with 7.1% of shares.

Another shareholder, Lucerne Capital, has also said it will vote against the board and Wissink.

Alex Captain, Cat Rock’s founder and managing partner, said the Grubhub deal was a “capital allocation mistake” that had led to a 75% stock market decline despite the food delivery boom doubling sales.

“We believe the bulk of the value destruction occurred because JET management gave investors a misleading financial outlook in advance of the two Grubhub shareholder votes, leading to two massive profit downgrades in 2021 and shattering investor trust in management,” he said.

“JET needs a new chief financial officer to restore credibility with the capital markets and a new supervisory board to quickly refocus the business on Europe, use the proceeds of divestitures to strengthen JET’s capitalisation, and actively evaluate other strategic options.”

Just Eat Takeaway said the removal of the board would be “both value destructive and destabilising”.

“JET’s management shares investor disappointment in the recent share price performance of the company,” it said. “However, the actions we are taking, including in relation to Grubhub, are intended to create significant shareholder value.

“We have always acted in good faith and in line with our obligations with regard to our market communications, including in respect of the Grubhub acquisition.”