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Amsterdam-based Takeaway.com has agreed to buy Just Eat in an 8.2 billion pound ($10.1 billion) deal to create one of the world's largest online food delivery firms, as rivals race to rule the $100 billion market.
Just Eat, founded in Denmark in 2000, competes with Amazon-backed Deliveroo and Uber Eats which have taken a bite out of the fast-growing sector by offering their own delivery services to restaurants.
Takeaway and Just Eat, which revealed talks on Saturday, said they will have leadership positions in many of the world's largest food delivery markets, including the United Kingdom, Germany, the Netherlands and Canada.
Scale is all-important as food delivery apps scramble to offer consumers the biggest choice. Most players are loss-making as they spend heavily on marketing and acquisitions.
Amazon led a $575 million fundraising in Deliveroo in May, although Britain's competition regulator is considering a full investigation into the deal.
Investors in London-listed Just Eat will receive 0.09744 Takeaway.com shares for each share, implying a value of 731 pence per Just Eat share, a 15% premium to their closing price on Friday, the two companies said on Monday.
Shares in Just Eat, which made a pre-tax profit of 102 million pounds in 2018, rose 25% to 794 pence, indicating expectations of a higher competing bid, while Takeaway's were up 3% at 0945 GMT following news of the deal.
Activist investor Cat Rock, which has holdings in both companies, has been pushing Just Eat to merge with a rival such as Takeaway, which has been driving sector consolidation.
Uber Eats declined to comment on the planned deal.
Takeaway, which bought the German activities of Delivery Hero for 930 million euros this year, says it is the leading food deliverer in continental Europe, Israel and Vietnam.
It argues that online food ordering will be highly profitable for just one player in each country.
Investec analysts said there was limited geographical overlap between the two, with the exception of Switzerland.
"(This) means the opportunity revolves around leveraging technology spend and administrative costs, in our view, and the sharing of best practice" Investec said. "This is presumably not insignificant, but less attractive than if they overlapped."
Analysts do not expect the latest deal to face anti-trust hurdles.
Just Eat, which originally focused on independent takeaway restaurants that offered pick-up or delivery services, charges a fee to join its platform and earns a commission on each order.
BUILDING SCALE
Just Eat has since upgraded its technology, launched its own delivery services using the experience gained from its purchase of Canada's SkipTheDishes.com, and struck deals with fast-food chains like Burger King, Subway and KFC.
But the strategy shift caused earnings momentum to slow sharply and Chief Executive Peter Plumb stepped down in January amid shareholder pressure. Just Eat has yet to find a permanent replacement for him.
Barclays analysts said merging with Takeaway would give Just Eat shareholders "the best operator in the space to run the business - a notable shift from missed execution from management in the last few years".
But the picture for Takeaway was more nuanced, with exposure to "a much messier story from a competitive and execution perspective".
On the other hand, Just Eat shares were still quite cheap and the value of being a global player would only increase over time, they said, adding: "This is a unique opportunity to build scale and that should benefit both parties in the long term."
Just Eat shareholders will own 52.2% of the combined group, which had 360 million orders worth 7.3 billion euros in 2018.
Mike Evans, Just Eat's chairman, will chair the combined group, while Takeway.com chief executive Jitse Groen will assume the role of CEO at the company, which will be incorporated, headquartered and domiciled in Amsterdam.