Just Eat Takeaway.com (JET) has been called on again to divest its US subsidiary Grubhub by Cat Rock, one its largest investors.
Cat Rock, which holds a 6.5 per cent stake in JET, wrote a letter to the company last month, calling for it to sell or spin off the Grubhub arm in order to maximise the valuation potential of the company and defend its position in Europe.
The call comes after DoorDash, one of the US’ largest food delivery companies acquired Finland-based Wolt Enterprises for $7 billion.
JET completed the high-profile $7.3 billion acquisition of Grubhub in June however Cat Rock believes that that the company has yet to take action to “fix the deep and damaging undervaluation of its equity by taking tangible action to unlock the value of its portfolio.”
READ MORE: Just Eat shareholders urge the company to sell Grubhub subsidiary to solve valuation issues
Just Eat responded to the criticism by saying that it is still early on in the relationship between the two companies and that it has plans to defend it against competitors which include Uber Eats.
The company’s share price is 34 per cent lower in the year to date.
“A deeply depressed stock price poses a real risk to JET’s business, limiting its financial and strategic flexibility, inviting competitors to invest in its markets, and leaving the company vulnerable to takeover bids well below its long-term intrinsic value,” Cat Rock wrote last month.
“JET must take substantive and immediate action to solve this valuation problem.”
“Fortunately, JET management has an obvious and actionable lever to quickly solve its valuation problem and refocus its business – selling or spinning-off Grubhub.”
