Just Eat’s shares were down 7 per cent at the opening on Friday after reports that Uber was in early-stage talks to acquire the food-delivery app Deliveroo.
Shares in the takeaway app dropped to a low of 647p on Friday morning as investors were spooked by the news that Uber was considering buying Deliveroo for “several billion” dollars to boost its food delivery service Uber Eats, a rival to Just Eat.
Shares of other European food-delivery companies also came under pressure: Delivery Hero, the German takeaway group, saw its shares fall by 1.9 per cent, while Takeaway.com slid 2 per cent on Friday morning.
Ian Whittaker, an analyst at Liberum, said investors in Just Eat should feel “reasonably comfortable” even if a Deliveroo-Uber deal were to happen.
Mr Whittaker spelt out three reasons:
(1) Just Eat has already grabbed a considerable share (⅓ of the UK market, for example) and, like any classifieds business (which is what this is), once you are a market leader and entrenched with customers, you are extremely hard to dislodge;
(2) Just Eat’s strategy is focused on “second tier” towns (nearly ⅔ of Just Eat’s customers in the UK, for example, is outside the 11 top cities) where Uber and Deliveroo is naturally weaker than the big cities; [and]
(3) There will be an interesting decision on rebranding — we would imagine Uber would want to rebrand Deliveroo as Uber Eats but, typically, that presents a risk that restaurants / consumers churn off during the rebranding.Ian Whittaker, Liberum
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