Board Repeats Past Mistakes That Led to Failed Appointment of Former
CEO Peter Plumb
Board Rejects Constructive and Private Assistance on CEO Search
Board Should Engage in Merger Discussions with Industry Peers to
Secure World-Class Leadership, Delivery Expertise, Premium for
Shareholders, and Equity Participation in Future Value Creation
GREENWICH, Conn.–(BUSINESS WIRE)–Cat Rock Capital Management LP (together with its affiliates, “Cat
Rock”), a long-term oriented investment firm and beneficial owner of
approximately 13.0 million shares of the common stock of Just Eat plc
(“Just Eat” or the “Company”) (LSE:JE) today sent an open letter to the
Company’s Board of Directors (the “Board”).
Cat Rock expresses deep concern regarding the Board’s recent appointment
of executives who lack online food delivery experience to critical roles
at the Company, repeating the mistake the Board made by appointing Peter
Plumb as CEO.
Cat Rock argues that a merger with a well-run industry peer would be a
far better outcome for shareholders than relying on the Board to choose
a new CEO, particularly given the Board’s poor record of CEO selection.
A merger could deliver world-class management, delivery capabilities, a
premium, and, critically, continued equity participation in any future
Cat Rock concludes the letter by strongly urging the Board to initiate
good-faith merger discussions with its industry peers, with the goal of
completing a transaction in the next few months.
Alex Captain, Founder and Managing Partner of Cat Rock Capital
Management LP, commented:
“Just Eat is a high-quality business with fantastic growth prospects. As
long-term shareholders with significant experience in this sector, we
are keenly focused on ensuring that the Board pursues the best path for
the Company and its shareholders.
“The Board’s experiment of appointing an industry outsider like Mr.
Plumb to the CEO role failed miserably and destroyed shareholder value.
Now Just Eat needs a world-class management team with online food
delivery experience and proven delivery capabilities. A merger is an
obvious path for securing these advantages for the Company.
“We believe that there would be significant strategic interest from
other industry participants and therefore urge the Board to swiftly and
seriously engage in good-faith merger discussions to create substantial
value for all Just Eat shareholders.”
The full text of Cat Rock’s letter is included below. This letter and
previous letters are also available at JustEatMustDeliver.com.
* * *
A LETTER TO THE JUST EAT BOARD OF DIRECTORS
11 February 2019
Board of Directors
Just Eat plc
Fleet Place House
London EC4M 7RF
Dear Members of the Board:
As you know, Cat Rock Capital Management LP (together with its
affiliates, “Cat Rock”) is a long-term supporter and shareholder of Just
Eat, which we believe is a high-quality business with significant growth
potential. Cat Rock is the beneficial owner of approximately 13.0
million shares of Just Eat stock.
We were pleased that the Board recognized its mistake in appointing
Peter Plumb as CEO. Since Mr. Plumb’s departure, we have attempted to
work with the Board constructively and privately to achieve the best
possible outcome for all Just Eat shareholders. Unfortunately, recent
developments have made it clear that the Board is squarely on the path
to repeat the serious mistakes that led to Mr. Plumb’s appointment. Just
Eat clearly needs a world-class management team with online food
delivery experience and proven delivery capabilities, and we urge the
Board to initiate good-faith merger discussions with industry peers to
secure these advantages for the Company and its shareholders.
Board Repeats Mistakes
After Mr. Plumb’s departure last month, we expected that the Board would
learn from its past mistakes by seriously engaging with shareholders and
experienced industry veterans to quickly secure much-needed leadership
for the Company. We and other shareholders hoped that the Board had
learned the “Plumb Lesson” – namely, that in a fast-moving space like
online food delivery, an executive who is trying to learn the
business cannot effectively lead the business.
Woefully, it appears that the Plumb Lesson remains entirely lost on the
Board. Instead, the Board continues to appoint executives with no online
food delivery experience to critical roles at the Company.
The Board’s misguided approach was evident in its handling of the
departure and replacement of Chris Simair, the CEO and Co-Founder of
SkipTheDishes, Just Eat’s Canadian business. We only learned indirectly
of Mr. Simair’s departure two weeks ago because the Board chose not to
disclose it to shareholders, even though Mr. Simair ran the Company’s
second largest and fastest growing business and played an integral role
in its global delivery initiative. Ignoring the Plumb Lesson, Just Eat
shockingly entrusted the leadership of this critical business to the
former Chief Marketing Officer of the Movember Foundation, a
not-for-profit organization that gets men to grow moustaches to raise
awareness of men’s health issues.1
The Board again flatly disregarded the Plumb Lesson by appointing Peter
Duffy as Interim CEO and, we understand, seriously considering him for
the permanent CEO role. While likeable on a personal level, Mr. Duffy is
an executive made in his predecessor’s imperfect mold – he too has no
prior online food delivery experience.
Board Rejects Assistance
To help the Board, we suggested two highly qualified potential CEO
candidates with extensive online food delivery experience and
recommended that the Board consult with a highly experienced industry
veteran on the search process. We also offered to meet the Board in
London in February to discuss the CEO search.
The Board did not even bother to contact one of the two candidates who
we had said needed to be contacted quickly and therefore lost the
ability to consider him for the role. The Board also ignored our advice
to consult with our suggested accomplished industry veteran to navigate
the search process. The Board ignored our offer to meet, instead telling
us via form email from the Company Secretary to wait for “public
announcements” on “significant developments.” Indeed, the Board seems
committed to conducting the same “thorough”,2 plodding, and
ultimately calamitous process that led to Mr. Plumb’s hiring in 2017.3
Assessing and Repairing Damage
Not only did Mr. Plumb make poor strategic and operating decisions while
CEO, he also eviscerated Just Eat’s management ranks. During his tenure,
Just Eat lost Chief Operating Officer Adrian Blair, Chief Marketing
Officer Barnaby Dawe, Chief People Officer Lisa Hillier, and, most
recently and concerningly, the CEO and Co-Founder of SkipTheDishes Chris
Any new CEO will face the daunting task of rebuilding Just Eat’s entire
management team while simultaneously attempting to execute on the
Company’s marketplace and delivery initiatives. We and our fellow
shareholders believe this is not a task for a Plumb-style learner.
Not surprisingly, the most accomplished industry leaders are
already leading other online food delivery companies. It is therefore
increasingly clear that a merger would be the best way for Just Eat to
secure the management talent and delivery expertise it needs to compete.
We have spoken with many other shareholders, and many of them share our
conclusion – a fair merger is a far better alternative than relying on
the Board, with its poor record of executive selection, to choose a new
leader for the Company.
As we have said previously, we believe Just Eat is a high-quality
business with substantial growth potential and valuable assets. We would
expect that there would be significant strategic interest in a merger
from other industry participants. For example, Jitse Groen, the CEO of
Takeaway.com (in which we and many other Just Eat shareholders are also
invested4), has publicly said that the UK is one of the three
best markets in Europe and, separately, that he intends to be active in
global consolidation.5 We and other shareholders would insist
upon a premium and substantial equity consideration to allow Just Eat
shareholders to participate in any value creation that occurs
The rationale for a merger with a well-run industry peer is clear:
1) Just Eat could secure world-class management for the Company.
Just Eat could acquire proven delivery capabilities.
3) Just Eat
shareholders could receive a premium for our shares.
4) Just Eat
shareholders could participate substantially in any value-creation that
5) A merger could make Just Eat dramatically
more formidable as it competes to secure its market position against
Uber, Deliveroo, and others.
We therefore urge the Just Eat Board to swiftly
initiate good-faith merger discussions with industry peers with the aim
of completing a transaction in the next few months.
If the Board continues to ignore shareholder feedback and fails to
seriously and expeditiously explore this avenue for value-creation, we
intend to take further action in advance of the Annual General Meeting
scheduled for 1 May 2019.
We welcome continued dialogue with other long-term shareholders and
remain open to discussions with the Board.6
Founder and Managing Partner
Cat Rock Capital
Sidley Austin LLP is serving as legal advisor to Cat Rock Capital.
About Cat Rock Capital Management LP
Cat Rock Capital
Management LP is a long-term focused investment firm that manages
capital on behalf of pension funds, endowments, foundations, and other
institutional investors. It seeks to invest in a select number of
high-quality companies, with a long-term approach that emphasizes deep
fundamental research. Cat Rock Capital is based in Connecticut, USA and
was founded in 2015 by Alex Captain, a former Partner at Tiger Global
(2) Source: Just Eat Press Release, “Just Eat appoints Peter Plumb as
Chief Executive Officer,” 6 July 2017.
(3) Notably, after stating that Mr. Plumb had been selected in a
“thorough process”, the Board went on to praise Mr. Plumb’s “ability to
retain, deepen and build senior management teams” while “creating value
for shareholders”. Of course, neither happened during Mr. Plumb’s
tenure, which was marked by an exodus of senior talent and negative
(4) Cat Rock owns approximately 2.5 million shares of Takeaway.com
(circa 4.9% of shares outstanding).
(5) Takeaway.com CEO Jitse Groen stated “the UK, Netherlands, and Poland
are the best markets in Europe” at the Morgan Stanley Telecom, Media,
and Telecommunications Conference on 16 November 2018.
(6) The views described herein are based on publicly available
information with respect to the Company. Certain financial information
and data used herein have been derived or obtained from, without
independent verification, publicly available information including
public filings with regulatory authorities and from other third-party
reports, by the Company or other companies deemed relevant. Cat Rock has
neither sought nor obtained consent from any third party for the use of
previously published information. Any such statements or information
should not be viewed as indicating the support of such third party for
the views expressed herein. Cat Rock shall not be responsible or have
any liability for any misinformation contained in any third-party report
or regulatory filing.
Cat Rock Capital is publishing this announcement solely for the
information of other shareholders in Just Eat plc. This announcement is
provided merely for general informational purposes and is not intended
to be, nor should it be construed as (1) investment, financial, tax or
legal advice, or (2) a recommendation to buy, sell or hold any security
or other investment, or to pursue any investment style or strategy.
Neither the information nor any opinion contained in this announcement
constitutes an offer to purchase or sell or a solicitation of an offer
to purchase or sell any securities or other investments in the Company
or any other company by Cat Rock Capital or any fund or other entity
managed directly or indirectly by Cat Rock Capital in any jurisdiction.
This announcement does not consider the investment objective, financial
situation, suitability or the particular need or circumstances of any
specific individual who may access or review this announcement and may
not be taken as advice on the merits of any investment decision. Any
person who is in any doubt about the matters to which this announcement
relates should consult an authorised financial adviser or other person
authorised under the UK Financial Services and Markets Act 2000.
FORWARD LOOKING STATEMENTS
This press release and the letter contain certain forward-looking
statements and information that are based on Cat Rock Capital’s beliefs
as well as assumptions made by, and information currently available to,
Cat Rock Capital. These statements include, but are not limited to,
statements about strategies, plans, objectives, expectations,
intentions, expenditures and assumptions and other statements that are
not historical facts. When used herein, words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “plan” and “project” and
similar expressions are intended to identify forward-looking statements.
These statements reflect our current views with respect to future
events, are not guarantees of future performance and involve risks and
uncertainties that are difficult to predict. Further, certain
forward-looking statements are based upon assumption as to future events
that may not prove to be accurate. Actual results, performance or
achievements may vary materially and adversely from those described
herein. There is no assurance or guarantee with respect to the prices at
which any securities of the Company will trade, and such securities may
not trade at prices that may be implied herein. Any estimates,
projections or potential impact of the opportunities identified by Cat
Rock Capital herein are based on assumptions that Cat Rock Capital
believes to be reasonable as of the date hereof, but there can be no
assurance or guarantee that actual results or performance will not
differ, and such differences may be material and adverse. No
representation or warranty, express or implied, is given by Cat Rock
Capital or any of its officers, employees or agents as to the
achievement or reasonableness of, and no reliance should be placed on,
any projections, estimates, forecasts, targets, prospects or returns
contained herein. Any historic financial information, projections,
estimates, forecasts, targets, prospects or returns contained herein are
not necessarily a reliable indicator of future performance. Nothing in
these materials should be relied upon as a promise or representation as
to the future.
Cat Rock Capital
+1 (203) 992-4630
(0) 7989 528421