Business

Just Eat Takeaway sells stake in Brazil’s iFood for up to €1.8bn

Just Eat Takeaway has sold its one-third stake in Latin American delivery app business iFood, in a deal worth up to €1.8bn that provides a vital cash injection to the company under pressure from changing consumer tastes since the pandemic.

Through the transaction, Dutch investment group Prosus will acquire the remaining third of the iFood business it does not already own.

Movile, an affiliate of Prosus, will pay €1.5bn in cash with a further €300mn contingent on the performance of the online delivery food sector over the next 12 months.

Just Eat has been hit by a slowdown in consumer demand, as food delivery companies are hit as people cut back on spending on takeaways amid a cost of living crisis. The company has reported a 7 per cent decrease in orders in the first half of 2022 compared with the same period last year.

The London-listed group has been forced into accepting a smaller amount for its iFood stake amid growing financial pressures on the company. Earlier this month, it wrote down $3bn from the value of its acquisition of rival delivery service Grubhub, just a year after acquiring the US group for $7.3bn.

Just Eat said last year that it rejected a €2.3bn offer for its stake in iFood, saying the sum was “simply too low”. It valued its investment in the Brazil-based business as worth €1.74bn as of June 30 this year. Analysts have previously suggested the iFood share could sell for between $1.5bn and $4bn.

On Friday, Just Eat said the proceeds of the sale will help “maintain its balance sheet strength” and with the repayment of debt.

Shares in Just Eat are down almost 80 per cent over the past year and investors have pressured the company to sell assets to boost shareholder confidence.

iFood was founded in 2011. Just Eat merged its fledgling Brazilian subsidiary RestauranteWeb with iFood in 2014. The decision was seen as a coup given the company has since cornered 80 per cent of the domestic market.

Prosus increased its position in iFood to 67 per cent through Brazilian internet company Movile, in which it is a major shareholder, and has ramped up investments since 2013. Negotiations with Just Eat for its 33 per cent holding commenced in 2020.

In March, Uber Eats withdrew from the Brazilian market amid fierce competition. The Brazilian antitrust agency Cade has since prohibited iFood from signing exclusive contracts with restaurants after competitor Rappi filed a petition alleging the group’s practices were restrictive.

Additional reporting by Michael Pooler in São Paulo


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