Just Eat plc, a leading global marketplace for online food delivery, today announces that it has agreed the acquisition of SkipTheDishes for an initial consideration of CAD $110 million (£66.1 million) to be primarily funded from existing cash resources.
With expected revenue of CAD$23.5 million for the current year ending December 2016, SkipTheDishes is one of Canada’s largest online food delivery marketplaces and has developed a technologically-advanced delivery platform focused on lower density metropolitan and suburban areas, which are key features of the Canadian market. It has a selection of more than 2,900 unique restaurants and 350,000 active customers. SkipTheDishes is currently experiencing strong top line growth, with orders for the 10 months to October 2016 of 1.6 million, representing year on year growth of 186 percent.
The acquisition is consistent with Just Eat’s strategic ambition to be the clear market-leader in Canada. SkipTheDishes is highly complementary to Just Eat’s existing Canadian operations, with limited geographical overlap between the two companies. It will bring scale, technological expertise and exceptional talent to the Company’s local operations. The combination of SkipTheDishes’s delivery capabilities with Just Eat’s growing network of restaurant partners and customers will significantly enhance Just Eat’s market-leadership in Canada.
Canada’s growing online food delivery market is worth over £1.5 billion annually. Online penetration is accelerating quickly but estimated to be significantly below many of Just Eat’s other developed markets at 31 percent. The large majority of SkipTheDishes’ orders are derived from its Canadian footprint. It is also operational in a small number of cities in the U.S. Mid-West region.
Given an outlook for continued, strong order growth over the medium term, as SkipTheDishes scales significantly across Canada, Just Eat expects the acquisition, net of one-off exceptional transaction and integration costs, to be moderately dilutive to EPS in 2017 and 2018 before being EPS accretive thereafter.
The initial consideration of CAD$110 million (£66.1 million) is split CAD$100 million payable in cash immediately on deal completion and CAD$10 million (£6.0 million) payable in 12 months in the form of 1,046,601 new Just Eat Ordinary shares of £0.01 each. The new Just Eat shares will be issued and listed shortly and held in escrow until the payment date. A further cash amount of up to CAD$90m (£54.1 million) may also be payable, subject to certain strict financial targets being met.
An application will shortly be made to The UK Listing Authority and The London Stock Exchange for the 1,046,601 Ordinary shares of £0.01 each, to trade on The London Stock Exchange and to be admitted to The Official List. These shares shall rank equally with the existing issued shares of the Company.
It is expected that admission of the shares will take place on 20 December 2016. Following admission, the Company’s total issued share capital will be 678,404,747 Ordinary shares of £0.01 each and the total number of voting rights of the Company’s Ordinary shares will be 678,404,747.
The Acquisition is expected to complete today.
David Buttress, CEO of Just Eat, commented: “The acquisition of SkipTheDishes will materially strengthen Just Eat’s number one position in Canada. Canada is a phenomenally exciting country for online food delivery, with significant runway for growth and a clear opportunity to drive channel shift. SkipTheDishes’ outstanding team, technological know-how and operational excellence has enabled it to develop a business model well-suited to Canada’s unique market conditions. It will complement our existing operations so that Just Eat is best-placed to address this fast-growing market.”
Joshua Simair, CEO and Co-founder of SkipTheDishes, commented: “This is a hugely exciting day for SkipTheDishes. Through the hard work of our fantastic team, we have enjoyed substantial growth since we started our company four years ago. By joining forces with Just Eat, we are bringing together two business models which will leave the combined business well-positioned to address the Canadian online food delivery market’s unique characteristics and unlock its considerable unrealized potential.”