Just Eat announced their intention to takeover rival food delivery services Hungry House and SkipTheDishes on Thursday, in deals worth over £350 million.
The online food delivery service, which was founded in Denmark and recently relocated to London, plans to acquire the businesses to expand its market share. The deal is said to total around £200 million on Hungry House, and £66.1 million for Canada-based SkipTheDishes.
Just Eat already operates in 13 countries, but is facing competition from recent additions to the sector in the form of UberEats and Deliveroo services.
Company CEO David Buttress commented:
“The UK has long been an engine of growth for Just Eat. While we have significantly expanded internationally in recent years, we have remained focused on building a high growth, sustainably profitable business domestically. Through this transaction, we would extend our market presence in the UK and sustain high levels of growth given the considerable opportunity in this market.”
The move has yet to be confirmed by industry regulators, but Mr Buttress continued:
“We think this brings benefits to both restaurants and consumers rather than diminishing them,”.
According to the Guardian, analysts at Canaccord Genuity said of the deal:
“Just Eat is a highly cash generative business, with a clear strategy of using M&A to expand market share in its existing territories. Today’s acquisitions… both look to be broadly sensible deals which should help shore up market share in two of Just Eat’s key territories, helping to drive economies of scale and strengthening the group’s presence here. It’s consistent with management’s strategy, and looks like it will be largely funded from internal resources, so at first glance a positive development for the business.”
Shares in Just Eat initially rose on the announcement, but have since dipped to trade down -0.80 percent as of 11.28 (GMT).