London, Amsterdam, New York. Just Eat Takeaway’s shares, like its menus, have a cosmopolitan flavor. But the meal delivery group now plans to delist its shares from the Nasdaq stock exchange. As many other companies have discovered, the costs of trading on multiple venues can outweigh the benefits.
The most important motivation for local listings is to provide foreign companies with acquisition currency. So it was with Just Eat Takeaway. Formed by the 2020 merger between Dutch company Takeaway.com and London-listed Just Eat, that was followed by last year’s $ 7.3bn all-share acquisition of US-based Grubhub. The latter’s shareholders received 30 per cent of total share capital held via American depositary receipts on Nasdaq.
The ADRs’ share, however, has now dwindled to 3.7 per cent. US shareholders do remain, such as Connecticut-based Cat Rock Capital Management, which has a 5 per cent stake. The activist investor is piling pressure on the group, whose market value has more than halved over the past year, to offload its US business.
But US investors have shown a preference for holding ordinary shares over ADRs. While ADRs handily help shareholders avoid foreign currency and other hassles, they suffer from thin trading volumes and specific service fees.
Extra costs and compliance burden for multiple listings are bad enough. Politics plays a part too. Tensions between Beijing and Washington has forced a retreat of Chinese companies from Wall Street. Brexit caused Europe’s largest budget airline Ryanair to ditch its London listing to comply with EU ownership rules.
Just Eat Takeaway has not yet decided on its final address, after having second thoughts on its original plan to use London as its primary trading venue. It would risk losing investors with UK-only mandates by dropping the listing. But UK investment managers now put just 14 per cent of the funds they manage in UK equities, down from 39 per cent in 2020, according to The Investment Association. The erosion of home bias is limiting the benefits of secondary listings.