London-based food delivery company Just Eat is continuing its recent acquisition spree, announcing Thursday it plans to spend at least £266 million to acquire two of its rivals.
Just Eat said it has agreed to acquire British takeaway service Hungryhouse from German parent company Delivery Hero for a base purchase price of £200 million, with a further cash consideration of up to £40 million, based on performance.
The acquisition, which is being funded through cash and credit, is expected to generate incremental EBITDA (earnings before interest, tax, depreciation, and amortization) of between £12 million and £15 million, Just Eat said in its announcement.
David Buttress, Just Eat chief executive, said: “The UK has long been an engine of growth for Just Eat. While we have significantly expanded internationally in recent years, we have remained focused on building a high growth, sustainably profitable business domestically. Through this transaction, we would extend our market presence in the UK and sustain high levels of growth given the considerable opportunity in this market.”
The acquisition will be subject to approval from UK competition regulator, the Competition and Markets Authority.
The company is also acquiring Canadian online food delivery service SkipTheDishes for an initial consideration of £66.1 million ($110 million Canadian dollars).
Buttress said in a statement the acquisition will “materially strengthen” Just Eat’s “number one” position in Canada, which has an online food delivery market worth more than £1.5 billion annually, according to NPD Group.
Just Eat has acquired a number of its competitors in 2016. In August, it bought the British assets of food delivery startup Takeaway.com for an undisclosed price.
And in February, Just Eat spent £94.7 million to acquire Spain’s La Nevera Roja, Italy’s PizzaBo/hellofood Italy, Brazil’s hellofood Brazil, and Mexico’s hellofoodMexico.
While Just Eat is buying up its rivals in order to expand, it still faces healthy competition in the UK from the likes of Uber Eats and Deliveroo.
Just Eat reported a 59% increase in revenues to £171.6 million in the six months ended June 30 2016. Underlying EBITDA rose 107% to £53.4 million.
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