Prosus offers to slash Delivery Hero stake to address EU concerns about Just Eat deal

Prosus has offered to reduce its stake in Delivery Hero to below 10% and relinquish its board seat to appease EU antitrust regulators. This action addresses the European Commission's concerns regarding Prosus's 4.1 billion euro deal involving Just Eat Takeaway, as regulators were unconvinced by Prosus's assurances despite its 27.4% Delivery Hero stake, given that Delivery Hero and Just Eat Takeaway compete in multiple European markets. The proposed remedy aims to secure Phase 1 approval for the transaction.

Analysis

Prosus has formally proposed a significant remedy to the European Commission to resolve antitrust concerns surrounding its 4.1 billion euro transaction with Just Eat Takeaway. The company has offered to divest its stake in competitor Delivery Hero from 27.4% to below 10% and to relinquish its corresponding board seat. This action directly addresses the Commission's preliminary assessment, which was unconvinced that Prosus's substantial holding did not confer influence over Delivery Hero, a direct competitor to Just Eat Takeaway in five European markets. The move is a calculated effort to secure a swift Phase 1 regulatory approval and avoid a more complex and protracted investigation. This development occurs within a context of heightened regulatory scrutiny in the food delivery sector, highlighted by a recent 329 million euro fine against Delivery Hero for cartel-like behavior, underscoring the Commission's commitment to enforcing competition rules.

Key Decisions for Investors

• Investors should interpret Prosus's proposed remedy as a significant de-risking event that increases the probability of its Just Eat Takeaway deal receiving regulatory approval.
• Shareholders in Delivery Hero (DHER.DE) must consider the potential for a near-term share price overhang, as the prospective sale of a large block of shares by Prosus could increase market supply.
• It is critical to monitor the European Commission's response, as a Phase 1 approval would remove a major uncertainty, whereas a rejection or demand for further concessions would signal continued regulatory headwinds for all parties involved.