FTSE merger mania: Takeaways and Stock Exchanges

Just Eat delivers deal with Takeaway.com and the London Stock Exchange takes a bite out of Refinitiv.

Article updated: 29 July 2019 2:00pm Author: Helal Miah

  • Just Eat shareholders will take a slice of Takeaway.com shares as £9bn merger is announced.
  • Meanwhile, LSE rallies 15% on plans for $27bn deal to buy Refinitiv.
  • We recommend shareholders hold on to Just Eat and LSE shares.

There were two significant merger and acquisition stories over the weekend, both resulting in material share prices jumps at the open this morning. Just Eat confirmed it has reached an agreement in principle to be acquired and merge with Takeaway.com of the Netherlands. Just Eat shareholders will receive 0.09744 Takeaway.com shares for each Just Eat shares valuing each share at £7.68 at current prices. This is good news for Just Eat shareholders in this fast growing industry but it still faces challenges amid competitors such as Deliveroo and Uber Eats. Just Eat and Takeaway.com have complimentary portfolios where they don’t currently compete with each other geographically and the merger indicates the need for consolidation in an industry where economies of scale are all-important. We recommend shareholders hold on to Just Eat shares as, while it is growing steadily, the pace of growth is likely to fall back.

The London Stock Exchange has announced the acquisition of financial data vendor Refinitiv Holdings (spun-out of Thomson Reuters 18 months ago) which has been very much welcomed by the market this morning as the shares are up in excess of 15%. The deal will expand upon the LSE’s data distribution capabilities, diversifying its exposure into more asset classes with a greater global reach. The deal would create the world’s largest listed global financial markets infrastructure and data analytics provider by revenue with expected annual cost synergies in excess of £350 after five years of the merger, making it materially earnings enhancing. The shares have now further built upon their all-time highs, easily smashing past £60 a share and now trades 30x 2019 earnings, a little lofty compared to its peers and for this reason we continue with our ‘hold’ recommendation. Nonetheless, LSE’s share price has defied many analysts concerned about valuation, and may well continue to do so, as long as complementary acquisitions keep coming and market trading volumes don’t fade too much, but a global economic slowdown or disastrous a Brexit could just do that.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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