Shares in Just Eat Takeaway.com (JET.L) surged on Friday after it announced it was selling its Brazilian business stake for €1.8bn (£1.5bn, $2bn).
The takeaway giant is set to hand over its stake to Dutch investment company Prosus as it aims to improve profitability and pay off its heavy debt pile.
The deal with Movile, an affiliate of Prosus, will see a €1.5bn cash injection and an additional instalment of up to €300m, depending on how well the online food delivery sector performs over the next year.
Prosus made a bid for Just Eat back in 2021, offering £4.9bn in attempts to derail its merger with Takeaway.com.
At the time, a major shareholder criticised the offer, saying it significantly undervalued the group. It urged Prosus to increase its offer by at least 20%.
“A year later, and it has accepted a material haircut,” Jefferies analyst Giles Thorne wrote in a report.
“While it probably would rather have kept the stake, the ‘corporate finance’ benefits of the sale were obviously too big to ignore.”
The agreement will give Prosus sole control of Brazilian platform iFood, which is considered to be one of the most attractive food delivery businesses in one of the world's biggest markets.
According to Just Eat Takeaway's half year results last month, iFood made a net loss of around €120m during the period, though sales grew 28%. Prosus said iFood was making about 70 million deliveries per month.
It comes after Just Eat recently reported heavy half-year losses of €134m, and took a €3bn impairment charge as it wrote down the value of its US subsidiary Grubhub, which it bought last year.
The company said it was also still pursuing a partial or full sale of its Grubhub business.
Danni Hewson, AJ Bell financial analyst, said: "Just Eat might have to swallow the sale of its US platform Grubhub at a similarly discounted price, not long after splashing out on a $7.3bn deal, as it looks to concentrate on boosting its market position in Europe.
“This retrenchment to a European focus makes sense when you consider how fierce the competition is on this side of the Atlantic."
He added: "However, there are long-term and short-term questions about the viability of the business. Increased costs mean the company will probably have to put up prices for delivery. But will people be prepared to pay more, particularly when cost of living pressures are becoming more acute?
"All the while the company is facing rising costs and will have to maintain promotional spend to protect and grow its market share."