Just Eat has planned an acquisition of rival UK takeaway online ordering website Hungryhouse. It has put an in depth investigation by the competitor regulators because of fears that the restaurants may end up with a worse deal.
There are also other food delivery services like Deliveroo and UberEats, but the competition and market authority said that they had represented less direct competition because they targeted different locations in fewer locations. Although Deliveroo and UberEats tend to offer higher end services working in bigger cities with more expensive restaurants.
The CMA said “therefore concerned that the loss of competition” from the deal “may result in worse terms for restaurant online ordering website using either of the two companies”.
The investigation will further move to an in depth “phase 2” inquiry, unless Just Eat makes proposals in the next week that allay the CMA’s concerns. This may take up to 32 weeks and the regulator can impose certain conditions with deal proceedings.
There are also other food delivery services like Deliveroo and UberEats, but the competition and market authority said that they had represented less direct competition because they targeted different locations in fewer locations. Although Deliveroo and UberEats tend to offer higher end services working in bigger cities with more expensive restaurants.
The CMA said “therefore concerned that the loss of competition” from the deal “may result in worse terms for restaurant online ordering website using either of the two companies”.
The investigation will further move to an in depth “phase 2” inquiry, unless Just Eat makes proposals in the next week that allay the CMA’s concerns. This may take up to 32 weeks and the regulator can impose certain conditions with deal proceedings.
Share value of Just Eat down by 1% to 558p just after the news on Wednesday.
Just Eat has also announced to buy Hungryhouse for a valu of £200m-£240m in the month of December. It has already paid a deposit of £6m to the owner of Hungryhouse, Berlin-based group Delivery Hero. This deposit is not refundable and should the transaction be blocked by the watchdog.
The company said that it “looks forward to co-operating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction”.
Cenkos analyst Simon French said the CMA’s move was “consistent” as management expectations around the time the deal was announced. He also said that the merger would “give Just Eat’s restaurant online ordering website partners access to an enlarged customer base while also broadening the offer to consumers”.
The two companies “use similar business models and, as such, are expected to be highly complementary and offer significant synergy benefits”.
The CMA inquiry comes with Just Eat deals with a rapid change of leadership – it has lost its both chief executive and chief financial officer and chairman in the space of just seven months.
David Buttress chef executive has stepped down due to his “urgent family matters” in the month of February and is due to start working part time as a partner in 83North, a venture capital firm. It is been one of the Just Eat’s investors.
John Hughes, chairman and interim chief executive, will be taking leave of absence this month because of medical problems.
Paul Harrison, who started off as chief financial officer in September, has taken over as interim chief executive. He has said Just Eat’s strategy and rapid growth will remain unaffected by the management changes.
Just Eat has also announced to buy Hungryhouse for a valu of £200m-£240m in the month of December. It has already paid a deposit of £6m to the owner of Hungryhouse, Berlin-based group Delivery Hero. This deposit is not refundable and should the transaction be blocked by the watchdog.
The company said that it “looks forward to co-operating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction”.
Cenkos analyst Simon French said the CMA’s move was “consistent” as management expectations around the time the deal was announced. He also said that the merger would “give Just Eat’s restaurant online ordering website partners access to an enlarged customer base while also broadening the offer to consumers”.
The two companies “use similar business models and, as such, are expected to be highly complementary and offer significant synergy benefits”.
The CMA inquiry comes with Just Eat deals with a rapid change of leadership – it has lost its both chief executive and chief financial officer and chairman in the space of just seven months.
David Buttress chef executive has stepped down due to his “urgent family matters” in the month of February and is due to start working part time as a partner in 83North, a venture capital firm. It is been one of the Just Eat’s investors.
John Hughes, chairman and interim chief executive, will be taking leave of absence this month because of medical problems.
Paul Harrison, who started off as chief financial officer in September, has taken over as interim chief executive. He has said Just Eat’s strategy and rapid growth will remain unaffected by the management changes.
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