Delistings from the London Stock Exchange (LSE) are routinely described as a “blow”, but some hits are painless. The departure of Just Eat Takeaway is one. The delivery firm’s life in London will mainly be remembered for a horribly timed and hubristic acquisition that impoverished the poor old shareholders.
The only charitable spin to put on the $7.3bn (£5.8bn) purchase of Grubhub, a US business, in 2021 is that Just Eat’s directors, led by Jitse Groen, the chief executive, must have been suffering a collective case of lockdown fever. Swayed by the boom in demand for takeaways during the Covid pandemic, they grabbed Grubhub at a takeover premium of 40%, even though no easy cost savings were available. Last week. Grubhub was sold for a mere $650m.
At least the deal was an all-share transaction – the US firm’s investors got 30% of the combined entity. If cash had changed hands, the damage to Just Eat’s share price would have been even worse. As it was, the top to bottom fall was almost 90%. One can note that Just Eat’s shareholders foolishly voted for the Grubhub deal by a big majority, but it was still a shocker.
Those investors will have to trade their shares exclusively on the Euronext Amsterdam exchange after Christmas, but that is what they have been doing already, more or less. The London quote is merely a secondary listing and attracts only 2% of the trading volume on an average day. In those circumstances, it is understandable that the company wishes to avoid what it calls the “administrative burden, complexity and costs” of a London listing.
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The main lesson here is just that secondary listings don’t work unless the company is enormous. Liquidity naturally tends to gravitate to one venue. Just Eat, worth a middling £2.6bn these days, had already ditched the US Nasdaq listing that was inherited with the Grubhub deal, so London is not being singled out for special punishment.
The UK, as Just Eat was keen to emphasise, will still be one of the firm’s big markets for delivering pizzas and other stuff (so there will be no relief from the irritating ads). But the corporate home has been Dutch ever since Groen’s Takeaway.com acquired Just Eat in 2020 in a deal that was more like a merger. At the time, Just Eat, version one, was a FTSE 100 stock, but the Dutch deal effectively signalled the end of its UK identity.
None of which is to deny that the LSE is suffering deep problems of lack of dynamism, especially in the sub-£5bn category of company. There is a desperate need for exciting arrivals. But Just Eat’s exit is not a case of a UK company running away in search of a higher share rating, which is the usual reason to worry. The decision flows instead from mundane and rational administrative considerations.
There is no need for mourning on this occasion, especially given the share price performance since the Grubhub silliness.