Pet services company Mad Paws (ASX: MPA) has today announced its first acquisition since listing on the ASX in March, reaching an agreement to buy dog treats and toys subscription business Waggly Club for $3 million.
Founded by its CEO Kate Herbert in 2016, Waggly Club receives around 2,000 orders per month for its parcels filled with Australian made, chemical-free healthy dog treats and toys that are tailored to each dog's age, chewing needs and size.
The subscription model accounts for 70 per cent of Waggly Club's revenue, which has almost doubled to $1.5 million this financial year.
"As we look to our next horizon, my aim is to scale Waggly and reach more and more dogs and their fur parents each month. To this end, I feel Mad Paws and Waggly are a perfect match," says.
"Mad Paws' current and future offerings in the premium subscription market are strongly aligned with Waggly's vision, value proposition and subscription expertise, and our products are complementary not only to the Mad Paws Dinner Bowl and Insurance offerings, but also for distribution and promotion via the Mad Paws marketplace network."
Herbert says it is a dream of hers to be staying on with the business and working with Mad Paws' exceptional leadership team to navigate this next exciting phase.
"It's a far cry from my kitchen table all those years ago, and I'm looking forward to delivering even more tail wags across the country," she says.
Through the agreement Mad Paws will acquire 100 per cent of shares in Waggly's parent company Gassett Group Pty Ltd for a cash consideration of $2 million payable on completion, as well as $1 million worth of MPA shares on a deferred consideration to be issued on 28 June.
Mad Paws' leadership clearly expect the acquisition to drive growth, as the new shares will be offered at $0.25 per share - well above the current price.
If certain performance-based hurdles are met by December 2022, Mad Paws will pay Waggly an extra $500,000.
"We are always interested in strategic acquisitions that accelerate our growth and which fit into the Mad Paws strategy," says Mad Paws CEO Justus Hammer, who co-founded the company with Alexis Soulopoulos.
"The Waggly group perfectly complements Mad Paws not just from a product and strategy perspective but we share the same passion for helping pets to live their lives to the fullest.
"The opportunity to cross sell between Waggly and Mad Paws customers is huge and we are excited for the Waggly team to join us."
The Mad Paws share price has been in steady decline since the highs of its IPO, but today's announcement has sent it up 23.5 per cent, passing the listing price to reach $0.21 at 11:30am AEST.
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