The online takeaway food service Just Eat is to spend up to £300m on a buying spree, swallowing up its smaller rivals Hungry House and SkipTheDishes.
Just Eat is paying £200m upfront to buy Hungry House, its biggest UK competitor, from the German group Delivery Hero. It has promised to hand over another £40m if the company hits performance targets.
“Through this transaction, we would extend our market presence in the UK and sustain high levels of growth given the considerable opportunity in this market,” said Just Eat’s chief executive, David Buttress.
Just Eat, which listed in 2014, earns commission on restaurant orders placed via its website and apps. Hungry House, which is the second-biggest player in the UK market after Just Eat, operates a similar model. Just Eat said Hungry House would generate topline operating profits of £12m to £15m in 2017 excluding exceptional integration costs of about £1m.
The Hungry House deal will __have to be cleared by the Competition and Markets Authority (CMA). After initially touching a new high of 623.5p Just Eat shares were down more than 1% at 591.5p by lunchtime.
The Jefferies analyst David Reynolds said consolidation was a good thing for online marketplace models, with the purchase of Hungry House removing the possibility of the rival combining with the likes of Deliveroo.
“While it may be some time before the CMA bless this deal, the strategic imperative for Just Eat makes sense,” said Reynolds. “We do not underestimate the importance of Just Eat taking Hungry House off the table.”
Separately Just Eat announced the acquisition of the fast-growing Canadian outfit SkipTheDishes in a cash and shares deal worth CAD$110m (£66.1m). The business, which has 350,000 customers, is expected to __have sales of CAD$23.5m in 2016. It handled 1.6m orders in the 10 months to October, which was up 186% year on year.
