The Baupost Group hedge fund is getting into the meal delivery business.
As Bloomberg News reported on Thursday (Aug. 12), the fund — run by value investor Seth Klarman — has purchased a 3.5 percent stake in Just Eat Takeaway.com, a Dutch food delivery service that was acquired by Grubhub earlier this year. The Boston-based fund completed the acquisition last week, with its shares valued at $645 million as of Wednesday (Aug. 11).
“Companies that let customers order groceries and restaurant meals online have surged in the last year as users turned to the apps during pandemic lockdowns,” noted the Bloomberg report. “Financial results from rivals such as Delivery Hero SE and Deliveroo Plc this week have shown that consumers are keeping the habit, even as restrictions on shopping and indoor dining lift in many markets.”
But Just Eat’s shares have dropped around 20 percent this year as order growth slowed during its second quarter.
According to Bloomberg, shareholder Cat Rock Capital Management LP has referred to Just Eat Takeaway as “deeply undervalued,” saying the firm “can quickly and materially improve its standing in the capital markets by improving transparency, selling non-core assets and exploring strategic options.”
In its first post-acquisition earnings report last month, Just Eat announced that orders for the combined company grew 51 percent in the first half of the year, with Grubhub underperforming (excluding their orders, the growth was 61 percent).
“There’s a lot of growth available around cities like New York and Chicago, et cetera,” said Just Eat Takeaway.com’s CEO Jitse Groen. “It is much easier to work from very strong positions … but it doesn’t mean we’re not going to be in, say, Ohio or Arizona. It’s just that our focus will not be there — it will be elsewhere.”
In May, the company announced plans to add grocery delivery to its German service, Lieferando.de, and has since revealed its hopes to add that service to all of the markets in which it operates, all as gross profit neutral.