JUST EAT plc, the leading online and mobile marketplace for takeaway food, has announced the proposed acquisition of Menulog Group Limited for a total cash consideration of A$855 million (£445 million) to be financed from the proceeds of an issue of new equity.
Menulog is the market leader in the Australian and New Zealand online takeaway marketplace. It has a selection of more than 5,500 unique restaurants and 1.4 million active consumers, and has seen rapid growth in order volume with the business achieving year-on-year order volume growth of 96% for the three months ended 31 March 2015.
The JUST EAT Directors believe there is a compelling rationale for the acquisition of Menulog which will allow it to acquire a market leader in a market of significant scale.
Important addition to JUST EAT
David Buttress, Chief Executive Officer of JUST EAT plc commented:
“Since the time of our IPO last year, we have consistently stated that participating in a disciplined manner in industry consolidation was an important strategic objective for JUST EAT. The acquisition of Menulog, a business with strong leadership in an attractive and fast-growing market, is fully consistent with this approach and will be an important addition to the JUST EAT business.
“The Menulog founders have together built a great business and I look forward to working closely with Menulog’s CEO and his experienced management team in the coming months.”
Also commenting on the Acquisition, Dan Katz, Chief Executive Officer of Menulog, said:
“I am very excited about the prospect of Menulog becoming part of JUST EAT, which has been a real inspiration for us as we have grown in the Australian and New Zealand markets. Acquisition will allow Menulog to benefit from JUST EAT’s experience and know-how, particularly in digital marketing, and enhance our customer service model to drive further growth and efficiencies across the business.”
Strategic rationale
- Access to a market of significant scale:
- The Australian and New Zealand takeaway delivery market size is estimated at c.A$3.0 billion (c.£1.6 billion)5, with online penetration rate estimated at c.22%
- The Australian and New Zealand markets are structurally very similar to that in the UK and are therefore markets in which aggregators should thrive
- These markets have: a strong takeaway food culture, a fragmented restaurant market, high levels of disposable income and a high level of ecommerce adoption
- Market leadership:
- Menulog is the market leader in the Australian and New Zealand online takeaway marketplace
- The transaction adds another two markets to those where JUST EAT has the #1 market leadership position
- Strong underlying business:
- Broadly similar business model to JUST EAT with an average commission rate of 9.8% for the twelve months ended 31 March 2015
- Significant growth across all key metrics
- Menulog generated 6.3 million orders for the twelve months ended 31 March 2015. In the three months ended 31 March 2015, orders were over 1.8 million, growing 96% year-on-year.
- Experienced management team:
Menulog has an experienced local management team, led by Dan Katz and Matthew Dyer, with a demonstrated track record of success in Australia and New Zealand. The management team is committed to remaining with the business.
Financial rationale
- Menulog generated £13.5 million of revenues and £1.2 million of EBITDA during the twelve months ended 31 March 2015 and is growing rapidly, with 96% year-on-year order growth for the three months ended 31 March 2015
- Significant upside potential from EBITDA margin expansion
- Creates a group with over 67 million orders per annum and growing rapidly
- Strong operational leverage and cash conversion
- Transaction is expected to be EPS accretive in first full year of ownership
- Cost and revenue synergies through leveraging JUST EAT’s proven expertise and know-how to drive further growth and efficiency
Equity fundraising
The Acquisition is classified under the Listing Rules as a Class 2 transaction and accordingly a shareholder vote is not required. It is currently expected that the consideration will be 100% financed from a proposed equity fundraising in the form of a placing and open offer (the “Equity Fundraising”).
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