On Friday, Just Eat said that it has agreed to purchase Rocket Internet's businesses in Italy and Spain. The UK-based company also said it is acquiring the Mexican and Brazilian arms from Foodpanda. The total transaction value will be around £94.7 million which will be funded from the company's existing capital resources.
The transaction marks the company's ambition to extend its business in the locations in which it function. The company noted that the takeaway food delivery sector in these locations is valued more than GBP 8 billion. Moreover, these territories provide a widened customer base for online takeaway eateries with a wider choice for food buyers.
In December 2015, Just Eat's JV with iFood and Movile processed 1.1 million food orders, an increase of 150% from last year. The total orders from the purchased businesses increased by 83 percent in 2015. The online takeaway restaurant anticipates the purchase to be accretive to 2016 adjusted earnings per share. Additional material collaborations as well as margin improvements are anticipated from the acquired businesses in 2018.
Just Eat expects acquisition of Brazil, Mexico and Italy businesses to close immediately. While the purchase of Spanish business, which is subject to approval from Comision Nacional de los Mercados y la Competencia, is expected to close within the end of 2016 second quarter.
Upon completion of the acquisition, functional control of Brazil hellofood will move to iFood. The total pre-tax losses for the year ending December 31 2014 were £13.1 million and the gross assets of the acquired businesses valued at £5 million.
According to FinancialTimes, Just Eat raised nearly 200 million US dollar previous month in order to widen its portfolio into fresh markets. The European rivals like Delivery Hero and Takeaway.com are also seeking expansion into new markets with an aim of expanding their business. In 2014, digital food ordering firms gained over 1 billion US dollar in investment globally, Financial Times said quoting a research company, CB Insights.
In 2015, Just Eat expanded its business into New Zealand and Australia by purchasing Menulog for £445 million. Rocket Internet removed an initial public offering of HelloFresh, in November, after investor hesitancy to support the company.
Just eat has an average organic sales growth of 46% through the nations it functions, sending its valuation jumping to 41 times the predicted earnings over the following 12 months, according to a data compiled by Bloomberg. The shares of Just Eat increased as much as 11% to 400 pence during the intraday trading session.
The acquisition highlights the company's focus in territories beyond its existing business and its aim to grow as a market leader in the takeaway market. Just Eat executives believe that the acquired businesses will help the company to broaden its vision.
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