Just Eat’s acquisition of Hungry House moves closer
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Just Eat’s acquisition of Hungry House moves closer

Just Eat’s £200 million acquisition of rival Hungry house looks closer to completion as the deal has been provisionally cleared by regulators. The Competition and Markets Authority (CMA) in the UK had looked into the tie-up due to concerns that it could lead to worse deals for restaurants. However, in the provisional results of this assessment, the regulators concluded that Hungry House only provides limited competition to Just Eat because: “it is much smaller and offers too few unique restaurants, making it increasingly difficult to attract and retain customers.”

Just Eat’s share price has risen by 27% so far this year

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SOURCE: Yahoo Finance

The inquiry was chaired by Martin Cave, who explained to the media why regulators were apparently unconcerned by the acquisition. He said:

"We carefully assessed competition in this rapidly evolving industry to make sure this merger would not result in increased prices or reduced quality of offering for either restaurants or their customers. We obtained evidence from all the major industry participants and carried out surveys, with the public and restaurants, to understand how the merger could impact both types of customers. 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."

In other words, Hungry House isn’t providing much competition to Just Eat anyway – so the bigger company gobbling it up won’t have a manifest impact on the sector’s fairness.

According to reports, the CMA will give a final decision next month.

Disclosure

Dominion holds Just Eat in its Global Trends Managed Fund.


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