London Stock Exchange finally strikes mega deal and Just Eat’s activist investor is the cat that got the cream

“The FTSE 100 jumped past the 7,600 level on Monday as a spate of corporate action put a new lease of life in the market. Separate deals involving Just Eat and London Stock Exchange as well as an increase in private equity activity this year have got investors excited over the prospect of further M&A.

“Investors were also bidding up shares in various large cap stocks which have been beaten up in the past year or so, including Centrica and Vodafone.

“Asian markets didn’t share investors’ optimism with Hong Kong’s Hang Seng index falling 1.1% and China’s SSE Composite index dipping 0.1%,” says Russ Mould, investment Director at AJ Bell.

London Stock Exchange

“The market has been waiting for some M&A news from London Stock Exchange ever since David Schwimmer took over as chief executive in 2018. Having previously worked for 20 years at investment bank Goldman Sachs, he is well versed with the art of deal making.

“The surprise that London Stock Exchange wants to buy Refinitiv is not the appetite to do a mega-deal but the target itself.

“Settlements group Euroclear had been seen as the logical target for London Stock Exchange, particularly as the latter bought a near-5% stake in the business earlier this year.

“Buying Refinitiv would not be a wild card move; in fact, there is a lot of merit to bolting the two companies together. It would provide London Stock Exchange with a significantly stronger position in the field of data.

“The big challenge is to clear any competition authority hurdles and convince shareholders that it isn’t overpaying for the deal. The 13%+ share price jump on the news would suggest that investors have initially given a big thumbs-up to the proposed deal.”

Just Eat

“One activist investor will be smiling like a Cheshire cat this morning after Just Eat received an approach from Takeaway.com to merge.

“Cat Rock Capital has been pushing for Just Eat to combine forces with a rival in order to boost scale and the deal has now been served up.

“Takeaway.com has previously signalled that it wanted to consolidate the market and that it considered the UK to be one of the most attractive markets in Europe. It may be no surprise that Cat Rock also has a stake in Takeaway.com so may have played cupid and set up the pair on a blind date.

“If the deal is successful, only Just Eat’s chief financial officer Paul Harrison would make the cut for the management board, with Takeaway.com’s representatives accounting for the other positions.

“It remains to be seen if Cat Rock can take all the credit for the strategic development, yet it seems to have had a major influence. That’s quite remarkable for a business that only has a 2% stake.

“It goes to show that activists are increasingly powerful and that putting pressure on a business in the public domain can often achieve results fairly quickly.”

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