So Naspers (I mean Prosus) has gone and offered £4.9 billion to the shareholders of Just Eat PLC.
This acquisition is part of Prosus’s ambition to build the world’s leading Food Delivery business and will complement existing offerings from iFood, Delivery Hero and Swiggy.
1st and foremost
A company is formed for and should be run for the benefit of its shareholders.
From a quick glance at Just Food’s fundamentals we have the following:
From the above we can see that Just East PLC:
Is currently in a high growth phase as seen in the rising sales figures and investment in PPE and intangible assets.
Its highest achieved profit was £79.9 million and £103.7 million in free cash flow.
Prosus investment of £4.9 billion would, at Just Eat PLC’s highest profit, earn a return of 1.63% and 2.12% on free cash flows.
Just Eat PLC looks way-overpriced.
In my opinion
Prosus would have better served its shareholders by placing the £4.9 billion in an African Bank fixed deposit and earn a maximum of 13.33% per annum rather than chasing after 2% investment returns.