Prosus bullish on Just Eat, even as rival bid strengthens

JOHANNESBURG/AMSTERDAM (Reuters) - Internet group Prosus PRX.AS is confident about its $6.3 billion (5 billion pounds) offer to buy Just Eat JE.L, CEO Bob van Dijk said on Friday, even though a rise in rival bidder Takeaway's shares has all but wiped out its financial upper hand.

FILE PHOTO: Signage for Just Eat is seen on the window of a restaurant in London, Britain, August 5, 2019. REUTERS/Toby Melville./File Photo

A higher price had been a big advantage for Prosus, the Dutch arm of South African e-commerce giant Naspers NPNnJ.J, in its hostile bid for the British food delivery service.

In the past few weeks, however, Takeaway’s share price has rallied to a point where its all-share offer nearly matches Prosus’ 4.9 billion pound ($6.3 billion) cash bid, leading to speculation one or the other will need to raise its offer.

Speaking to reporters after Prosus and its parent published half-year results, van Dijk refused to be drawn on whether this was an option for Prosus, but said it remained confident.

“The multiples of Takeaway are high, which we think basically reflects a very significant amount of downside risk,” Van Dijk told reporters, referring to financial metrics such as Takeway’s share price to earnings ratio.

“The fact that the multiples of Takeaway are now higher only strengthens our story.”

Shares in Prosus, which reported a rise in core headline earnings from continuing operations to $1.7 billion in the six months to Sept. 30, were up slightly at 1431 GMT to 62.45 euros.

Spun off and listed by Naspers in Amsterdam earlier this year, Prosus houses its parent's internet empire including the jewel in its crown - a 31% stake in Chinese internet titan Tencent 0700.HK.

The separation was a bid by Naspers to try to narrow a hefty discount between its own value and that of the Tencent stake.

Naspers said the listing of Prosus had unlocked $10 billion in value, based on current market valuations.

Van Dijk said he was pleased with the impact so far, but it was still early days and the market had not yet settled - over time, the discount could narrow further.

“I think the structural reasons why we did it we feel extremely good about ... it’s way to early to read into things at this point in time,” he said.

Naspers NPNJn.J reported a 48% slump in half-year profit, which was at the better end of its guidance range after a previously-flagged drop in gains on investments at Tencent.

Its shares were up 0.82% by 1446 GMT.

Reporting by Emma Rumney in Johannesburg and Bart Meijer in Amsterdam; Editing by Jason Neely and Mark Potter