Proposed acquisition of Menulog and fundraising

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PLEASE SEE THE IMPORTANT NOTICE AT APPENDIX I OF THIS ANNOUNCEMENT.

JUST EAT plc

PROPOSED ACQUISITION OF MENULOG GROUP LIMITED AND UNDERWRITTEN EQUITY FUNDRAISING

JUST EAT plc ("JUST EAT" or the "Company"), the world's leading online and mobile marketplace for takeaway food[1], announces the proposed acquisition of the entire issued and outstanding capital stock of Menulog Group Limited ("Menulog") for a total cash consideration of A$855 million (£445 million[2])(the "Acquisition") to be financed from the proceeds of an issue of new equity.

Menulog is the market leader in the Australian and New Zealand online takeaway marketplace[3]. It has a selection of more than 5,500 unique restaurants and 1.4 million active consumers. Menulog has seen rapid growth in order volume with the business achieving year-on-year order volume growth of 96% for the three months ended 31 March 2015[4].

The JUST EAT Directors believe there is a compelling rationale for the acquisition of Menulog which will allow it to acquire a market leader in a market of significant scale.

Strategic rationale

· Access to a market of significant scale:

o The Australian and New Zealand takeaway delivery market size is estimated at c.A$3.0 billion (c.£1.6 billion)[5], with online penetration rate estimated at c.22%[6]

o The Australian and New Zealand markets are structurally very similar to that in the UK and are therefore markets in which aggregators should thrive

o These markets have: a strong takeaway food culture, a fragmented restaurant market, high levels of disposable income and a high level of ecommerce adoption

· Market leadership:

o Menulog is the market leader in the Australian and New Zealand online takeaway marketplace3

o The transaction adds another two markets to those where JUST EAT has the #1 market leadership position

· Strong underlying business:

o Broadly similar business model to JUST EAT with an average commission rate of 9.8% for the twelve months ended 31 March 2015

o Significant growth across all key metrics

o Menulog generated 6.3 million orders for the twelve months ended 31 March 2015. In the three months ended 31 March 2015, orders were over 1.8 million, growing 96% year-on-year[7].

· Experienced management team:

o Menulog has an experienced local management team, led by Dan Katz and Matthew Dyer, with a demonstrated track record of success in Australia and New Zealand. The management team is committed to remaining with the business.

Financial rationale

· Menulog generated £13.5 million of revenues and £1.2 million of EBITDA during the twelve months ended 31 March 2015 and is growing rapidly, with 96% year-on-year order growth for the three months ended 31 March 20157

· Significant upside potential from EBITDA margin expansion

· Creates a group with over 67 million orders per annum and growing rapidly

· Strong operational leverage and cash conversion

· Transaction is expected to be EPS accretive in first full year of ownership

· Cost and revenue synergies through leveraging JUST EAT's proven expertise and know-how to drive further growth and efficiency

Equity fundraising

The Acquisition is classified under the Listing Rules as a Class 2 transaction and accordingly a shareholder vote is not required. It is currently expected that the consideration will be 100% financed from a proposed equity fundraising in the form of a placing and open offer (the "Equity Fundraising"). With respect to the Equity Fundraising, JUST EAT has entered into a standby underwriting agreement with J.P. Morgan Cazenove pending the launch of the Equity Fundraising and publication of the Prospectus.

The Equity Fundraising is expected to be launched in mid to late May, following receipt of the approval of the Acquisition by the Foreign Investment Review Board ("FIRB") in Australia. Completion of the Equity Fundraising is expected early to mid June 2015.

Further details in relation to the Acquisition and Equity Fundraising will be set out in the Prospectus which shall be published in due course subject to receipt of approval from FIRB. Please also refer to the Important Notice in Appendix I to this announcement.

Further information

David Buttress, Chief Executive Officer of JUST EAT plc commented:

"Since the time of our IPO last year, we have consistently stated that participating in a disciplined manner in industry consolidation was an important strategic objective for JUST EAT. The acquisition of Menulog, a business with strong leadership in an attractive and fast-growing market, is fully consistent with this approach and will be an important addition to the JUST EAT business. The Menulog founders have together built a great business and I look forward to working closely with Menulog's CEO and his experienced management team in the coming months."

Also commenting on the Acquisition, Dan Katz, Chief Executive Officer of Menulog, said:

"I am very excited about the prospect of Menulog becoming part of JUST EAT, which has been a real inspiration for us as we have grown in the Australian and New Zealand markets. This proposed acquisition will allow Menulog to benefit from JUST EAT's experience and know-how, particularly in digital marketing, and enhance our customer service model to drive further growth and efficiencies across the business."

J.P. Morgan Cazenove (as defined in Appendix II) is acting as Sole Financial Adviser in relation to the Acquisition, sponsor and bookrunner in relation to the Equity Fundraising and Corporate Broker to JUST EAT.

This summary should be read in conjunction with the full text of the announcement.

Conference call and webcast details

The Company will hold a presentation for analysts today at 9.30 am at J.P. Morgan, 60 Victoria Embankment, London EC4Y 0JP. 

The presentation will be webcast live and will be accessible via the JUST EAT website at www.just-eat.com. 

An on-demand replay will also be available on the JUST EAT website following the presentation. 

Audio Conference Call Details

UK & International Number +44 (0) 20 3003 2666

UK Toll-Free Number 0808 109 0700

Reference 'JUST EAT'.

Enquiries

JUST EAT plc

PROPOSED ACQUISITION OF MENULOG GROUP LIMITED AND UNDERWRITTEN EQUITY FUNDRAISING

1. Introduction

JUST EAT plc ("JUST EAT" or the "Company"), the world's leading online and mobile marketplace for takeaway food[8], announces the proposed acquisition of the entire issued and outstanding capital stock of Menulog Group Limited ("Menulog") for a total cash consideration of A$855 million (£445 million[9]) (the "Acquisition"). The JUST EAT Directors believe Menulog is a clear strategic fit for the Company and provides the opportunity to acquire a market leader in a market of significant scale.

Menulog is the market-leading online takeaway food ordering marketplace in Australia and New Zealand[10]. It operates under the Menulog and EatNow brands with a selection of more than 5,500 unique restaurants and 1.4 million active consumers as at 31 March 2015. For the three months ended 31 March 2015, Menulog's platform processed over 1.8 million orders. Menulog has seen rapid growth in order volume with the business exhibiting year-on-year order volume growth of 96% for the three months ended 31 March 2015[11].

Menulog is the market leader in the attractive Australian and New Zealand online takeaway market. The size of the combined Australian and New Zealand takeaway delivery market is estimated at c.A$3.0 billion (c.£1.6 billion)[12], with online penetration rate estimated at c.22%[13].

The Acquisition is classified under the Listing Rules as a Class 2 transaction and accordingly a shareholder vote is not required. The consideration will be financed from an issue of new equity. It is currently intended that this will be structured as a placing and open offer (the "Equity Fundraising"). The Equity Fundraising is expected to be launched in mid to late May, subject to the approval of the Acquisition by the Foreign Investment Review Board ("FIRB") in Australia.

2. Reasons for the Acquisition

The Company's overall mission statement is to empower consumers to love their takeaway experience. Critical to achieving this is being a market leader in the countries in which the Company operates and to ensure the consumer has a strong source of information and choice in a highly fragmented sector.

The Directors believe that the Acquisition fits with the Company's stated objectives and will provide the Group with the following benefits:

· Access to a market of significant scale: The combined Australian and New Zealand markets make up a c.A$3.0 billion (c.£1.6 billion)12 takeaway delivery opportunity with online penetration rate estimated at c.22%13. The Australian and New Zealand markets exhibit a number of strong characteristics that make it similar to the UK and therefore a market in which aggregators should thrive. This includes a takeaway food culture, a fragmented restaurant market, high levels of disposable income and a high level of ecommerce adoption. Australia has a population of 23.8 million[14], annual disposable income of c.£21 thousand[15] per household, and an 88.9% urbanisation rate[16].

· Market leadership: Menulog is the market leader in the Australia and New Zealand online takeaway ordering marketplace. The transaction increases the number of markets where JUST EAT has the #1 market leadership position.

· Strong underlying business: Menulog generated 6.3 million orders in the 12 months to 31 March 2015 and over 1.8 million orders during the three months ended 31 March 2015, growing at 96% year-on-year[17]. The business generated £13.5 million of revenues and £1.2 million of EBITDA during the twelve months ended 31 March 2015[18].

· Builds on track record of value-enhancing acquisitions: JUST EAT has a history of making value-enhancing acquisitions to consolidate existing market positions, enabling entry into new markets of scale through the acquisition of market leaders and to accelerate advancement of JUST EAT's technology base. The Acquisition delivers on JUST EAT's stated M&A aims of acquiring a market leader in a market of significant scale.

· Experienced management team: Menulog has an experienced local management team, led by Dan Katz and Matthew Dyer, with a demonstrated track record of success in Australia and New Zealand that is committed to staying with the business. The team has the ability to leverage JUST EAT's proven expertise and know-how to drive further growth and efficiency.

3. Overview of the Company

JUST EAT operates the world's leading online and mobile marketplace for takeaway food[19], with operations in 13 countries and over 45,700 contracted restaurant partners within its network. JUST EAT provides consumers with an easy and secure way to order and pay for food from local takeaway restaurants. Takeaway restaurants who join the JUST EAT platform have their menu made accessible to online consumers. These consumers search for local restaurants using their postcode and any cuisine preference. JUST EAT transmits the details of the consumers orders to the takeaway restaurants via proprietary Just Connect Terminals ("JCTs"), which restaurants use to accept orders and send confirmations to the consumer. Once prepared, the restaurant will deliver the food to the consumer, who can choose to pay securely online at the point of ordering or cash upon delivery.

JUST EAT derives the vast majority (76% in the year ended 31 December 2014) of its revenues from commission charged to restaurants on the value of successful orders placed. This, plus certain administration fees, typically related to card payments, comprise the B2C order-driven revenues that, in total, accounted for 89% of all revenues in 2014. The remaining 11% of the Company's revenues consisted of one-off connection fees paid by restaurants to join JUST EAT, top-placement advertising fees and other revenues.

JUST EAT strives to give consumers better information and more choice. With the huge range of cuisines JUST EAT offers through the more than 45,700 contracted restaurant partners on its platforms, supported by over seven million reviews, consumers can make informed choices, whether ordering through online, mobile or a software application.

Since the first JUST EAT website was launched in Denmark in 2001, the Company has expanded globally with operations in Belgium, Brazil, Canada, France, Ireland, Italy, the Netherlands, Norway, Spain, Switzerland and the UK. In early 2015, JUST EAT expanded into Mexico with the acquisition of Sindelantal Mexico. JUST EAT is the market leader in the majority of the countries in which it operates, which is a key success factor in the sector. The UK, where the Company is the clear market leader[20], is the largest of JUST EAT's operations in terms of number of takeaway restaurants and orders, representing 73% of total Group revenues.

Over 1,500 people now work for JUST EAT globally. The Company's headquarters are in central London, but the business operates local teams in every country where it does business and has dedicated in-house customer care teams.

4. Information on Menulog Group Limited

Overview of Menulog Group Limited

Menulog is the market-leading online takeaway food ordering marketplace in the attractive Australian and New Zealand markets[21]. It operates under the Menulog and EatNow brands with a selection of more than 5,500 unique restaurants and 1.4 million active consumers as at 31 March 2015. For the three months ended 31 March 2015, Menulog's platform processed over 1.8 million orders. Menulog has seen rapid growth in order volume with the businesses achieving year-on-year order volume growth of 96% for the three months ended 31 March 2015[22].

History

Menulog Group Limited operates Menulog.com.au and EatNow.com.au. Menulog was founded in Australia in 2006[23] and EatNow was founded in Australia in 2010. The two companies merged in January 2015 to form Menulog Group Limited. Both Menulog and EatNow achieved more than 1 million orders per year within four years of launching their takeaway food operations and by 1 January 2014 had more than 500,000 and 250,000 active consumers, respectively. Both Menulog and EatNow were early adopters of mobile platforms for the takeaway food business, with Menulog launching a mobile app in 2009 and EatNow launching its mobile app in 2012. EatNow was subsequently awarded Best Mobile Commerce Application at the Online Retail Industry Awards in 2013.

Operations

The business operates in five key cities in Australia (Sydney, Melbourne, Brisbane, Perth and Adelaide) as well as Auckland in New Zealand. Menulog has 81 employees working across two offices and is headquartered in Sydney, Australia.

Menulog derives the vast majority of its revenues from commissions charged to restaurants on the value of successful orders placed. Additional revenues include fees related to card payments and device fees.

The business has a strong mobile platform, with over 50% of its orders during the three months ended 31 December 2014 placed from mobile devices, either through Menulog's mobile apps or mobile websites. Furthermore, the business also has a growing collection business, with pick-up orders accounting for over 12% of all orders placed in 2014.

Menulog is managed by a team with a demonstrated ability to grow the business, in-depth understanding of local market dynamics in Australia and New Zealand as well as the broader online takeaway food sector, and extensive experience leading high growth businesses. Dan Katz, the CEO of Menulog will continue to oversee the Menulog business as part of the Enlarged Group.

Financial / Operational

Menulog has demonstrated a strong growth trajectory with the business showing sustained quarter-on-quarter growth with 1.4 million active consumers (83% growth year-on-year[24]) generating over 1.8 million orders (96% growth year-on-year24) and £3.8[25] million in revenues in the quarter ended 31 March 2015. Other important operational metrics for the twelve months ended 31 March 2015 include:

· 6.3 million orders;

· Over 5,500 unique restaurants;

· 1.4 million active consumers;

· Average commission rate of 9.8%;

· Revenues of £13.5 million and EBITDA of £1.2 million[26];

· Gross assets of £8.4 million as at 28 February 2015[27]; and

· Profit before tax of £1.2 million26.

Overview of Menulog's market

Menulog operates in the takeaway food market in Australia and New Zealand. The Directors believe that this market exhibits a number of strong characteristics that make it a market in which aggregators should thrive, including a fragmented restaurant market and a high level of ecommerce adoption.

Australia has a population of 23.8 million[28], annual disposable income of c.£21 thousand per household[29], an 88.9% urbanisation rate[30] and an overall takeaway delivery market size of c.A$2.5 billion (c.£1.3 billion)[31]. The significant majority of the Australian population resides in major city centres, with the five major cities of Sydney, Melbourne, Brisbane, Perth and Adelaide that Menulog presently operates in representing c.60% of the overall Australian population28.

The New Zealand market has a population of 4.6 million[32], annual disposable income of c.£14 thousand per household29, an 86.3% urbanisation rate[33] and an overall takeaway delivery market size of c.A$0.5 billion (c.£0.3 billion)[34]. The significant majority of the New Zealand population also resides in major city centres, with the largest city of Auckland, where Menulog currently operates, representing over 34% of the overall New Zealand population32.

The Directors believe that the Australian and New Zealand markets exhibit many of the same characteristics as the UK takeaway market, making it an attractive proposition for an aggregator such as JUST EAT. Furthermore, the Directors believe the proportion of takeaway ordering online is lower in the Australian and New Zealand markets than in the UK as evidenced by Domino's proportion of online orders being only 50% in Australia compared to 71% in the UK. The channel shift from telephone to online ordering experienced by Domino's in the Australian market is exhibiting similar characteristics to that of the UK historically. This leads the Directors to believe that the proportion of takeaway ordering online will continue to increase in the Australian market.

JUST EAT's strategy for Menulog

The Directors believe there are multiple opportunities to leverage JUST EAT's proven expertise and know-how to drive further growth and efficiency. These include applying JUST EAT's scale, security and knowledge base to future-proof the business and rolling out centrally developed JUST EAT tools and features to improve the customer experience and further fuel penetration, including expanded top placement services. Furthermore, applying JUST EAT's best in class digital and brand marketing expertise will drive awareness and is expected to result in brand collateral savings. Standardisation of processes and opportunity to move to a 'follow-the-sun' customer service model, in addition to increased scale within our contact centres, will result in cost efficiencies and operational improvements. Acquiring scale will bring increased buying power to the Company, which is expected to result in savings in merchandise, hardware procurement (including JCT's) and card payment processing fees. Finally, local retention and incentivisation arrangements are being planned to facilitate integration.

In the short term, JUST EAT plans to maintain the Menulog and EatNow brands but will continue to explore potential integration opportunities.

5. Management and employees

The local management team is led by Dan Katz and Matthew Dyer, who have a track record of success in Australia and New Zealand and remain committed to the business. The Board attaches great importance to the skills and experience of the management and employees of Menulog and believes that they will be an important factor for the success of the Enlarged Group.

6. Financing of the Acquisition

The consideration to be paid by JUST EAT at Completion will be A$855 million (£445 million[35]). This consideration is currently expected to be 100% financed from the gross proceeds of the Equity Fundraising.

With respect to the Equity Fundraising, JUST EAT has entered into a standby underwriting agreement with J.P. Morgan Cazenove pending the launch of the Equity Fundraising and publication of the Prospectus which will follow in due course subject to receipt of approval from FIRB. It is currently expected that the Equity Fundraising will be structured as a placing and open offer. Three of the Company's pre IPO investors, SM Trust, Index Ventures and Vitruvian Partners have indicated that they do not currently intend to take up their entitlement under the proposed placing and open offer. The standby underwriting agreement contains customary representations, warranties, indemnities, undertakings and conditions.

7. Expected timetable of principal events

APPENDIX I - IMPORTANT NOTICE

This announcement has been issued by, and is the sole responsibility of, JUST EAT plc ("JUST EAT").

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for New Shares in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement is not for release, publication or distribution to persons in any of the Excluded Territories and should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

This announcement does not constitute, or form part of, an offer to sell or the solicitation of an offer to purchase or subscribe for any Company securities in any of the Excluded Territories or the United States. The New Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, taken up, exercised, resold, renounced, or otherwise transferred, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

The distribution of this announcement into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, this announcement and the Prospectus should not be distributed, forwarded to or transmitted in any of the Excluded Territories.

Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Cazenove by the FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither J.P. Morgan Cazenove, nor any of its affiliates, directors, officers, employees or advisers accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the contents of this document, including its accuracy or completeness or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Equity Fundraising, the New Shares or the Acquisition, and nothing in this document should be relied upon as a promise or representation in this respect, whether or not to the past or future. J.P. Morgan Cazenove and its affiliates, directors, officers, employees and advisers accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this document or any such statement.

J.P. Morgan Securities plc, which conducts its UK investment banking businesses as J.P. Morgan Cazenove is authorised in the UK by the Prudential Regulation Authority ("PRA") and regulated in the UK by the PRA and the Financial Conduct Authority ("FCA"), is acting exclusively for JUST EAT and no one else in connection with the Equity Fundraising and will not regard any other person as its respective clients in relation to the Equity Fundraising and will not be responsible to any person other than JUST EAT for providing the protections afforded to clients of J.P. Morgan Cazenove, nor for providing advice in relation to any matters referred to herein.

J.P. Morgan Limited, which conducts its UK investment banking businesses as J.P. Morgan Cazenove and is authorised and regulated in the UK by the FCA, is acting exclusively for JUST EAT and no one else in connection with the Acquisition and will not regard any other person as its respective clients in relation to the Acquisition and will not be responsible to any person other than JUST EAT for providing the protections afforded to clients of J.P. Morgan Cazenove, nor for providing advice in relation to or any other matters referred to herein. For the purposes of this announcement, references to "J.P. Morgan Cazenove" are to both J.P. Morgan Limited and/or J.P. Morgan Securities plc, as appropriate.

Cautionary statement regarding forward-looking statements

This document contains forward-looking statements that involve substantial risks and uncertainties and actual results and developments may differ materially from those expressed or implied by these statements by a variety of factors. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as "believe", "expects", "may", "will", "could", "should", "shall", "risk", "intends", "estimates", "aims", "plans", "predicts", "continues", "assumes", "positioned" or "anticipates" or the negative thereof, other variations thereon or comparable terminology. These forward-looking statements speak only as at the date of this document. In addition, all projections, valuations and statistical analyses provided in this document may be based on subjective assessments and assumptions and may use among alternative methodologies that produce different results and should not be relied upon as an accurate prediction of future performance. Except as required by applicable law or regulation, none of the Company, it agents, employees or advisers undertakes any obligation to update or revise any forward-looking or other statements, whether as a result of new information, future developments or otherwise and none of the Company, J.P. Morgan Cazenove or their respective directors, officers, employees, agents, affiliates and advisers, or any other party undertakes or is under any duty to update this document or to correct any inaccuracies in any such information which may become apparent or to provide you with any additional information. To the fullest extent permissible by law, such persons disclaim all and any responsibility or liability, whether arising in tort, contract or otherwise, which they might otherwise have in respect of the presentation.

1.

APPENDIX II - DEFINITIONS / GLOSSARY