• Posted on November 7, 2022
• Aashish

PORTFOLIO

(JUSTEAT TAKEAWAY MERGER)

Introduction

Merger and acquisition (M&A) is a business strategy taken into consideration by two or more organizations when they have certain common goals for achievement. This strategy is applied by the organizations in order to increase the market share to a greater extent by integrating the business models of the organizations and operating mutually in the market. However, the two prime motives of this strategy are to reduce the business risks and improve financial performance. In this study, discussions will be made regarding the merger of Just-Eat and Takeaway.com and analyze its business scope in the present as well as the upcoming period. Moreover, the challenges that can be faced will be highlighted and appropriate recommendations will be provided as well.

Importance of founding culture of Just-Eat and implications of the merger with Takeaway.com

Just-Eat was a company founded in the year 2000 by Jesper Buch in Denmark who was able to launch the company website successfully in 2001 (Cleverism, 2020). Along with this website, potential customers were able to search for restaurants on their online platform that provide takeout food and place their desired order. Apart from this, the company also offered two options, i.e., either to pick up the order from the restaurant or get it delivered at their home address. As the company was able to make significant progress, it eventually expanded its business to London where later on its headquarters was set up (Cleverism, 2020). In the course of time, the company was able to gain higher profits and made further expansions in several parts of Europe as well as in North America.

While conducting the business in its potential markets, the company focused on building a strong organizational culture in order to retain the employees and grow its business even further. As suggested by Dunne (2019), there were four key areas that were primarily stressed upon, i.e., understanding, energy, information and motivation. Along with these aspects, Just-Eat intended to drive inspiration and motivation within the employees in an upward direction and lead its diverse workforce empathetically. The focus on information depicted to convey the details of the business with the stakeholders and maintain transparency with the customers as well as the organization. As an individual company, it held a substantial market share in around 15 countries in the European as well as North American continent.

Presently, the company has merged with another company of similar background known as Takeaway.com which is a Netherland-based food delivery company. This company was also established in the year 2000 with an intention to provide information about takeout restaurants available in the respective regions to the customers (Justeattakeaway, 2020). However, to make a greater expansion in the potential market and acquire a higher position among the competitors, Just-Eat and Takeaway.com decided to merge together and operate in the markets mutually. Therefore, both the organizations initiated the protocol and merged together in January 2020 to become Just Eat Takeaway.com (Justeattakeaway, 2020). Accordingly, a shared business model has been created by the new company so that it can operate in the market and efficiently increase the satisfaction level of the customers. Hence the new business model that has been developed by the company is represented with the following diagram:

usiness model of the company for establishing a consumer-restaurant relationship through Just Eat Takeaway.com

(Source: Justeattakeaway, 2020)

According to its present hold on the market, it has been found out that the company has a large market share that is spread across 24 countries of four continents namely, Europe, North America, South America and Australia (Justeattakeaway, 2020). The new headquarter that has been set by the company is in Amsterdam and facilitates its customers with online payment, delivery and orders. The consumers can order their desired food from their selected restaurant from the online website or the mobile application that has been developed specifically for this company. The revenue that is generated by the company is constituted from the commission that is levied upon the food and also from the service fee from online payment. The market map on which the company is spread and operates is provided below:

According to the recent reports, as shared by Degeler (2019), it has been found out that both the companies have successfully combined with each other and has also raised €700 million by August 2020. Based on this fact, it can be said that the company has efficiently utilized its merger in order to operate in the potential market. The half-yearly report that has been published on August 2020 has provided that the company has experienced a huge benefit on the basis of its operations in the market and the customer base has significantly increased along with the merger. Previously, the company has an active customer base of 19.5 million but now, it has been analyzed that the company serves approximately 54 million active customers that are spread in different parts of the world (Justeattakeaway, 2020). Additionally, the company has also observed its growth in revenue; gross profit, orders, GMV and many more [refer to appendix 1].

Evolution and structure of the organization based on the new Just-Eat Takeaway.com design

According to statistical records that are available in the respective sources regarding the food delivery online platforms and organizations, it has been found out that Meituan is a China-based online food delivery company that had the highest GMV (Gross Merchandise Value). However, the second position was previously acquired by Uber Eats on the basis of its GMV (Thisismoney, 2020). After the recent merger of Takeaway.com and Just Eat, it has been observed that the GMV obtained by the company has overreached that of Uber Eats and took over its place in the global competition list among the other rivals. The records that have been captured about the company and its potential rivals are represented in the following graphical representation:

As soon as the merger was successfully implemented, the company started operating with the new name of “Just Eat Takeaway.com”. Moreover, the company was also able to issue more convertible bonds and shares in the market on the basis of which, it was able to raise a total of €700 million extra. Apart from this, the company profile also got updated in the London Stock Exchange and Euronext Amsterdam (Sillars, 2020). In this way, it can be said that the company is making massive efforts to get a tight grip in the UK market and establish its business firmly. Takeaway.com majorly used to operate in the markets of 11 countries where its major market hold was on Germany and Netherland. However, as it merged with Just Eat in 2020, the market hold increased to 24 countries and therefore, the customer base became huge as well. Moreover, it also entered the market of the UK and therefore has established its name and business operations there as well. According to the analysts, as influenced by Bradshaw and McCormick (2019), it has been found out that the merged company will have more than €10 billion on the basis of the present individual shares.

One of the most significant areas that are explored by the strategy of M&A is value creation. The concept of value creation tends to be the driver, goal and test of any deal that is being conducted on the basis of an M&A. However, it can be mentioned that it is definitely not an easy and cheap procedure to implement it successfully. The intention of merger and acquisition cannot be made possible unless the proposal is sanctioned by the other market forces. As mentioned by Chidambaram (2019), trust is gained by the market based on the capabilities of the acquirer in order to increase the value and also achieve synergies. Other factors are also taken into consideration such as ability and reliability of leadership, the price paid, the business post-close and the success gained from the integration. On the basis of these factors, the potential of a merger can be assessed and therefore it can be sanctioned for its future implementation of the strategy.

Another concept that is integrated frequently and is also a necessary aspect is synergy. According to the concept of synergy, it is portrayed that the performance and combined value of two companies can be greater compared to the sum of their total individual potentials. Hence, as opined by Duan and Jin (2019), it is measured for the companies who are leaning towards adopting the M&A strategy in order to experience higher growth in the market from their respective businesses. On the basis of the company results acquired half-yearly, it can be seen that the key performance indicators are showing positive results from the business operations that it conducted after the merger. The KPIs that can be taken into consideration include active customers, number of orders, GMV (gross merchandise value), revenue, gross profit and EBITDA.

At the time when Just Eat was an independent food delivering business, the company followed its own business model which comprised of three main components, i.e., consumers, shareholders and restaurants. Along with these components, the company focused on achieving sustainable growth in order to benefit themselves as well as society. Moreover, this business model was responsible for bringing development in four different areas of growth, i.e., the brand, people, scalability and technology (Annualreports, 2014). However, according to the present structure of the business model with the combined values of Just Eat and Takeaway.com, the prime focus has been designated over the consumers and the restaurants.

Challenges to be faced by Just-Eat Takeaway.com in the upcoming period

As it has been established from the previous discussions, it has been found out that adopting the strategy of M&A is not a cup of tea and it cannot be adopted as soon as two companies formulate this strategy. However, the journey after obtaining success in the imposition of the M&A strategy is also not smooth enough. As soon as two or more companies merge with each other, several possibilities emerge that can eventually be responsible for degrading the overall business as well as its performance in the potential market. According to the intentions as well as the agreements that have been made between Just Eat and Takeaway.com, it can be said that there are very few chances of experiencing problematic situations in the future. However, some of the challenges that can eventually come up include disagreement among the shareholders of the company, retention of the existing staff of both the companies, maintaining international relationships and have a significant impact on the prevailing market competition (Sułkowski et al. 2019).

• Disagreement among the stakeholders:

  After a merger between organizations, it can be said that the number of shareholders increases for a single entity. However, in order to operate in the market efficiently, a peaceful environment is required to be maintained within the organization and also work with mutual cooperation among each other. On the other hand, when the number of shareholders or stakeholders increases, the variability in the opinion also increases along with it. Accordingly, as influenced by Muralidharan et al. (2017) it creates conflicts between them and making an efficient decision for benefitting the company becomes difficult. This, in turn, can eventually impact the possibility of the company to lose its opportunities for growth and can experience significant losses in the future as well.

• Retention of the existing employees:

  As soon as the merger strategy is incorporated within the respective companies, their present business model, as well as the company mission and vision, also gets changed. According to the nature and behaviour of the employees, it can be mentioned that they are highly reluctant to change and tend to stay in their comfort zone. According to Henningsson et al. (2018), when a change is introduced or implemented within an organization, employees play a huge role in opposing the initiative of the organization. Since both the online food delivery businesses are merging together, they will eventually revise their business model, organizational value, objectives and vision for conducting their businesses. The new changes to be implemented by the new organization might not be acceptable to the existing employees due to which they might resign from their posts. Hence, the retention of the employees in this type of situation becomes extremely difficult.

• Impact on the prevailing market competition:

  According to the nature of merger and acquisition, it can be said that it creates a possibility of gaining monopoly power within the economy and disrupt the normal competition that prevails. The CMA (Competition and Market Authority) is an organization that is responsible for analyzing the synergies of the respective organizations that are going to get merged and also assess its capability of disrupting the present market competition. The merger between Just Eat and takeaway.com was approved by this organization but also highlighted that it has the potential to create a duopoly in the long run. Due to this reason, it will be difficult for new entrants to enter the market and sustain in such a high level of competition (Humphery‐Jenner et al. 2017). Moreover, the market share captured by these firms is tremendous and therefore, this level of competition will create a significant impact on the entire market where it operates and drive the existing players out of it.

• Maintaining international relationships:

  A company, especially a global one has a huge set of a client base. As explained by Christofi et al. (2019), when it eventually decides to adopt a merger strategy with another organization, it simultaneously has an impact upon the base of clients and customers. This is because the former company has significant recognition and image among them and the other company collaborating with it can be unknown. There remains uncertainty regarding the performance of the company in the upcoming period and therefore, it becomes difficult for them to assess its capabilities. Therefore, its relationship with the international client and customer base gets compromised in the long run.

Recommendations to the HR Group

The human resource employees, as well as the department, have an active role to play in order to manage the process of M&A and therefore, make it a successful initiative towards attaining higher growth. The primary role that is played by the HR aims at analyzing the pitfalls that can be experienced during the process. Apart from this, based on the views of Sarala et al. (2019), they are also responsible for determining the culture of the organization and assess its compatibility with the one it is going to merge. As mentioned in the previous discussions, there are significant challenges that can come up while imposing an M&A strategy. Among the variety of challenges that are faced by the company, managing the employees is the most essential one. Before the strategy is imposed, HR has to identify if there is a mismatch between the employees of the organizations that are going to get merged. In case they identify any disdain between the employees, then it is immediately reported to their hierarchy so that they can be aware of the upcoming situation. On the basis of these facts, certain recommendations that can be provided to the HR group are as follows:

• The HR group should analyze the present performance of the company and analyze its impact in the upcoming period:

  Since the companies have already merged with each other and also conducting the operations in a collaborative way, therefore, it is necessary to assess their performance based on its outcomes. As stated by Rodríguez-Sánchez et al. (2018), any negative outcome might become a huge disaster for the new company to maintain its business in the market and continue its operations. Moreover, it is also necessary to forecast the consequences that it might face in the upcoming period. In this way, the strength of the company can be maintained along with a peaceful workplace atmosphere.

• Communicate all the necessary changes and problems to the stakeholders that are being experienced by the organization:

  The HR department of the company has to play a crucial role in communicating and conveying every essential information regarding the organization to the stakeholders. This can be done by organizing meetings, send formal notices through e-mails, messages and even on office dashboards. Communication among the stakeholders is significantly important without which, several complications might emerge (Brueller et al. 2018). Along with the help of an effective communication system, all the employees, as well as the shareholders, can be kept aware of the organizational performance and also update them with the necessary changes that are going to be implemented for its benefit.

• Portray the common goal of the organization to be achieved by the stakeholders and influence them with the organizational culture:  Employees can be unified when they are assigned with a common goal that is to be achieved. Hence, as mentioned by Rao-Nicholson et al. (2020), HR has to highlight the organizational goal in front of the workforce and motivate them to achieve the target cooperatively. Moreover, they can also influence them by enhancing the culture of the organization and portraying its importance to gain success in the future.

Conclusion

According to the discussions that have been involved in this study, it can be said that the merger of Just Eat and takeaway.com has been highly successful to attain business growth in the market. Along with the help of this merger, the company has been able to operate in a larger market segment and expand its business as well. Based on the financial performance of the company, it has been found out that the adoption of the merger strategy has been a successful initiative towards increasing its profit margins from the conducted business. Due to this merger, the company has gained a higher position in the global market for online food delivery business and took over the position of Uber Eats. However, there are certain challenges that can be experienced by the company regarding its initiative towards M&A. Accordingly, it has been recommended to the HR group to analyze the performance of the firm, communicate information to every stakeholder and highlight the organizational goals and culture in front of the employees.

Reference List

Annualreports, 2014. JUST EAT plc Annual Report & Accounts 2014. Available at: https://www.annualreports.com/HostedData/AnnualReportArchive/j/LSE_JE_2014.pdf [Accessed on 13th November 2020]

Bradshaw, T and McCormick, M. 2019. Takeaway.com and Just Eat agree food delivery tie-up. Available at: https://www.ft.com/content/8e613b9a-b747-11e9-8a88-aa6628ac896c [Accessed on 13th November 2020]

Brueller, N.N., Carmeli, A. and Markman, G.D., 2018. Linking merger and acquisition strategies to postmerger integration: a configurational perspective of human resource management. Journal of Management, 44(5), pp.1793-1818.

Chidambaram, R. R. 2019. Strategy For Value Creation In M&A: What No One Is Talking About. Available at: https://medium.com/@ramkumar1984.rajachidambaram/strategy-for-value-creation-in-m-a-what-no-one-is-talking-about-cdad33b2cea8 [Accessed on 13th November 2020]

Christofi, M., Vrontis, D., Thrassou, A. and Shams, S.R., 2019. Triggering technological innovation through cross-border mergers and acquisitions: A micro-foundational perspective. Technological Forecasting and Social Change, 146, pp.148-166.

Cleverism, 2020. Careers at Just Eat. Available at: https://www.cleverism.com/company/just-eat/ [Accessed on 13th November 2020]

Degeler, A. 2019. Just Eat Takeaway.com raises €700 million, finally gets the merger deal approved. Available at: https://tech.eu/brief/just-eat-takeaway-com-raises-e700-million-finally-gets-the-merger-deal-approved/ [Accessed on 13th November 2020]

Duan, Y. and Jin, Y., 2019. Financial constraints and synergy gains from mergers and acquisitions. Journal of International Financial Management & Accounting, 30(1), pp.60-82.

Dunne, S. 2019. Just Eat: Building A Business From Inception To IPO. Available at: https://www.forbes.com/sites/workday/2019/08/27/just-eat-building-a-business-from-inception-to-ipo/?sh=36e5a3cf41bb [Accessed on 13th November 2020]

Henningsson, S., Yetton, P.W. and Wynne, P.J., 2018. A review of information system integration in mergers and acquisitions. Journal of information Technology, 33(4), pp.255-303.

Humphery‐Jenner, M., Sautner, Z. and Suchard, J.A., 2017. Cross‐border mergers and acquisitions: The role of private equity firms. Strategic Management Journal, 38(8), pp.1688-1700.

Justeattakeaway, 2020. A leading online food delivery marketplace. Available at: https://www.justeattakeaway.com/ [Accessed on 13th November 2020]

Justeattakeaway, 2020. Analyst Presentation H1 2020. Available at: https://www.justeattakeaway.com/investors/results-and-reports/?ufprt=DDC2CE24066FCB3CCD2E6EEAFEED65C981FD62866EAE9A47AFF17A7B7167BC5FC7AC6AE446B8341DF77ABFFEA973283D1941129F46F839D1B4C7BABCA10844329501B7181FF72982F6E2CF1BEEDB921EB23D3E13C8DC52FA0575B255AE7B5A034A3A65ED9AA6D0F9EC5F656D5DD500C0229D11FD&code=2D0031007C0064006F0077006E006C006F00610064007C0031003400330034007C003200310031003700 [Accessed on 13th November 2020]

Justeattakeaway, 2020. What we do. Available at: https://www.justeattakeaway.com/about-us/what-we-do/ [Accessed on 13th November 2020]

Muralidharan, E., Wei, W. and Liu, X., 2017. Integration by emerging economy multinationals: Perspectives from Chinese mergers and acquisitions. Thunderbird International Business Review, 59(4), pp.503-518.

Rao-Nicholson, R., Khan, Z., Akhtar, P. and Tarba, S.Y., 2020. The contingent role of distributed leadership in the relationship between HR practices and organizational ambidexterity in the cross-border M&As of emerging market multinationals. The International Journal of Human Resource Management, 31(2), pp.232-253.

Rodríguez-Sánchez, J.L., Mora-Valentín, E.M. and Ortiz-de-Urbina-Criado, M., 2018. Successful human resources management factors in international mergers and acquisitions. Administrative Sciences, 8(3), p.45.

Sarala, R.M., Vaara, E. and Junni, P., 2019. Beyond merger syndrome and cultural differences: New avenues for research on the “human side” of global mergers and acquisitions (M&As). Journal of World Business, 54(4), pp.307-321.

Sillars, J. 2020. Just Eat merger with Takeaway.com cleared by competition regulator. Available at: https://news.sky.com/story/just-eat-merger-with-takeaway-com-cleared-by-competition-regulator-11977574#:~:text=Just%20Eat’s%20%C2%A36.2bn,create%20Just%20Eat%20Takeaway.com. [Accessed on 13th November 2020]

Sułkowski, Ł., Seliga, R. and Woźniak, A., 2019. Strategic challenges of mergers and acquisitions in the higher education sector. Entrepreneurial Business and Economics Review (EBER), 7(2).

Thisismoney, 2020. Costs of Just Eat Takeaway merger and Grubhub acquisition cause delivery giant’s losses to soar to over £140m despite orders rising by a third. Available at: https://www.thisismoney.co.uk/money/markets/article-8619057/Just-Eat-Takeaway-losses-soar-despite-orders-rising-third.html [Accessed on 13th November 2020]

Know more about UniqueSubmission’s other writing services:

Assignment Writing Help

Essay Writing Help

Dissertation Writing Help

Case Studies Writing Help

MYOB Perdisco Assignment Help

Presentation Assignment Help

Proofreading & Editing Help