Just Eat shareholder wants merger with rival instead of hunt for CEO


‘Lack of online food delivery experience’ in roles at UK firm concerns US hedge fund

Just Eat, the British online takeaway service, has come under fresh pressure from an activist investor, which is calling for it to merge with a rival rather than appoint a new chief executive.

Cat Rock Capital Management, a US hedge fund that owns a 1.7% stake in Just Eat, sent an open letter to its board to demand a merger with another online food delivery company within the next few months.

It expressed “deep concern regarding the board’s recent appointment of executives who lack online food delivery experience to critical roles at the company, repeating the mistake the board made by appointing Peter Plumb as CEO”.

Cat Rock said: “A merger with a well-run industry peer would be a far 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 hedge fund threatened further action before Just Eat’s annual meeting on 1 May if its demands are not met.

Plumb left abruptly three weeks ago, only 16 months after he joined the online food delivery firm from Moneysupermarket.com and launched an investment drive that slowed earnings growth sharply and angered several top shareholders.

Plumb upgraded Just Eat’s technology and launched its own delivery service to fight back against mounting competition from Deliveroo and Uber Eats, which have been making heavy losses as they battle for market share. Just Eat started as a marketplace business that links customers to restaurants who take care of their own deliveries.

Just Eat, which made a pre-tax loss of £76m in 2017, dropped out of the FTSE 100 index in December after a 13-month stint. A profit warning pushed its share price to a low of 533.8p in November, although it has since recovered to 718p, up 2% on Monday, taking its loss in the past year to 13%. The firm’s market value has fallen to £4.87bn, from £5.5bn when it was promoted to the top share index in November 2017.

In the letter, Alex Captain, Cat Rock’s founder and managing partner, strongly criticised the board for appointing Peter Duffy as interim chief executive and seriously considering him for the permanent role, noting that he has no prior online food delivery experience.

Captain said Cat Rock had suggested two candidates for the top job who have extensive online food delivery experience but the board had failed to contact one of them in time and also refused to meet the hedge fund in London.

He accused Plumb of making poor strategic and operating decisions as CEO and of losing a number of senior executives during his tenure, most recently Chris Simair, the head of SkipTheDishes, Just Eat’s Canadian business. Captain said the firm had failed to disclose Simair’s departure to shareholders, even though he ran the company’s second-largest and fastest-growing business and played a key role in its global delivery initiative.

Cat Rock previously called for management to give financial targets to the market as well as considering selling businesses such as its stake in the Brazilian market leader iFood.

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