Just Eat Takeaway’s largest independent shareholder has said investors should vote to fire the takeaway 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 Monday that Just Eat had “torpedoed the company’s share price by providing a misleading outlook” ahead of its $7,300 acquisition of rival Grubhub. million (£5.7 billion) in 2020. .
The food delivery industry expanded greatly during the coronavirus pandemic lockdowns, and Jitse Groen, the founder of Dutch Takeaway.com, attempted to grow the company through two big deals.
Amsterdam-listed Just Eat Takeaway (JET) was formed in 2020 through the merger of Takeaway.com and UK rival Just Eat. It then bought Grubhub to give the company access to the huge US market, but last week the company appeared to accept the deal was a mistake after saying it was looking for a “strategic partner” or a sale.
Just Eat Takeaway’s market value rose to €17.4bn (£14.7bn) in early 2021, before a series of earnings downgrades triggered a liquidation that caused its value to drop to €5.5bn. Monday.
Cat Rock said the company had “destroyed” €16bn of capital value due to a “complete loss of confidence in the allocation of capital and the financial management of the boards of directors and supervisors”.
The investor, who owns a 6.9% stake with 14.8 million shares, said he will vote against a series of shareholder resolutions at the annual meeting in Amsterdam on May 4. They include voting against the supervisory board, the re-election of chief financial officer Brent Wissink, and the board’s authority to issue new shares. He also said he will abstain in a vote on Groen, who is JET’s chief executive and its largest shareholder, with 7.1% of the shares.
Another shareholder, Lucerne Capital, has also said it will vote against the board and Wissink.
Alex Captain, founder and managing partner of Cat Rock, said the Grubhub deal was a “capital allocation error” that led to a 75% drop in the stock market despite the food delivery boom sales doubled.
“We believe most of the value destruction occurred because JET management gave investors a misleading financial outlook ahead of Grubhub’s two shareholder votes, which led to two massive earnings downgrades in 2021 and wrecked investor confidence in the administration,” he said.
“JET needs a new CFO to restore credibility with the capital markets and a new supervisory board to quickly refocus the business in Europe, use proceeds from divestitures to strengthen JET’s capitalization, and actively assess other strategic options.”
Just Eat Takeaway was contacted for comment.