Just Eat Bondholder Group Claims Grubhub Sale Is Default Event

Just Eat Takeaway.com's (JET) recent acquisition of Grubhub has sparked controversy, with a bondholder group claiming that the sale constitutes a default event under the terms of their bonds. This article explores the implications of this claim and its potential impact on both companies.

The bondholder group, led by Elliott Management, argues that the all-stock transaction with Grubhub triggers a change in control clause, which allows bondholders to redeem their bonds at par plus accrued interest. However, the terms of the Grubhub sale do not provide this option, potentially leading to a default event.

If the bondholder group's claim is upheld, JET and Grubhub could face significant consequences. The bondholders may seek to enforce their rights, potentially leading to legal disputes and financial penalties. This could strain the companies' financial resources, impacting their ability to invest in growth and maintain operations. Additionally, a default ruling could damage the companies' reputations, making it more difficult to attract investors and customers.

However, the outcome of this dispute will depend on the specific terms of the bonds and the legal interpretation of the default event. If the sale is deemed a strategic move rather than a default, JET's credit rating and borrowing costs may remain unaffected, allowing it to continue its growth trajectory.

The Grubhub sale, valued at $6.5 billion, significantly impacts JET's debt-to-equity ratio. Assuming JET's current market capitalization of $10 billion and debt of $5 billion, the sale reduces debt to $1.5 billion, lowering the debt-to-equity ratio from 0.5 to 0.15. This improves JET's financial health, enhancing its ability to manage future growth and potential market downturns.

In conclusion, the bondholder group's claim of default has significant implications for JET and Grubhub. The outcome of this dispute will depend on the specific terms of the bonds and the legal interpretation of the default event. If the sale is deemed a strategic move rather than a default, JET's credit rating and borrowing costs may remain unaffected, allowing it to continue its growth trajectory. However, if the bondholder group's claim is upheld, the companies could face significant financial and reputational consequences.