Just Eat’s Brazil drop-off is first of many

A Just Eat delivery man rides his bicycle in Nice amid the coronavirus disease (COVID-19) outbreak in France, February 16, 2021. REUTERS/Eric Gaillard/File Photo

LONDON, Aug 19 (Reuters Breakingviews) - Just Eat Takeaway (TKWY.AS) is facing a new reality in food delivery. A year ago, Chief Executive Jitse Groen rejected a 2.3 billion euro offer for its 33% stake in Brazilian food delivery startup iFood, claiming it undervalued the business. However, on Friday, the 4.6 billion euro business agreed to sell the stake for around 1.8 billion euros to $133 billion Amsterdam-listed Prosus (PRX.AS).

The knock-down price, however, is a relief to investors. On Friday, shares in Just Eat soared nearly 30%, as the valuation is likely to have been better than many had expected. At 1.8 billion euros, Prosus’s offer values the stake at nearly 5 times iFood’s expected revenue in 2022, according to a Breakingviews estimate. That’s a hefty premium to the average 1 times Just Eat Takeaway and its European rivals, Delivery Hero (DHER.DE) and Deliveroo (ROO.L), are currently valued on. With inflation soaring and punters expected to cut out unnecessary spending, Groen may want to accelerate a plan to flog its U.S. division Grubhub. (By Karen Kwok)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

Capital Calls - More concise insights on global finance:

Meme stocks prove they have nine lives

U.S.-Taiwan trade talks amplify corporate alert read more

Payments star’s crash highlights investor myopia read more

Hong Kong’s biggest listing may travel badly read more

China applies thin bandage to real estate market read more

Editing by Aimee Donnellan and Oliver Taslic

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.