Just Eat share price rises after provisional go-ahead for Hungry House deal

Just Eat

Just Eat

Just Eat PLC's (LON:JE.) planned £200mln acquisition of rival Hungryhouse has been given the provisional green light by competition regulators.

The Competition and Markets Authority said the takeover, which it had been probing since May, would not restrict competition and lead to a worse deal for consumers or restaurants.

However, the decision today concluded that the takeover will offer more to customers by having both unique and chain restaurants on offer for online takeaway through a single online platform.

It said: "The industry is evolving rapidly following the entry of platforms, such as Deliveroo, UberEATS and Amazon, which also manage or facilitate delivery services on behalf of restaurants". Just Eat shares are now up 4.91 percent on the news at 737.50 (1007GMT).

"The watchdog felt that Hungryhouse provided limited competition to Just Eat because it was much smaller in size and offered too few unique restaurants, making it increasingly hard for Hungryhouse to attract and retain consumers".

We found that Hungryhouse was a weak competitor to Just Eat and so competition is unlikely to be substantially reduced by this merger, especially given the entry and rapid expansion of innovative suppliers in this sector.

The CMA initially considered this a key distinction and therefore ruled in its early assessment of the proposed deal that these delivery businesses could not be called rivals to Just Eat and Hungryhouse and so referred the merger for what is known as a Phase 2 investigation.

"We will continue to work with the CMA ahead of its publication of a final decision".

It will announce its final decision in the following weeks.

Just Eat agreed to pay £200 million to Delivery Hero for Hungryhouse and will shell out another £40 million, depending on performance.