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Maggie Beer Holdings (ASX: MBH) has reached a deal to acquire Hampers & Gifts Australia (HGA) for $40 million plus an earnout of up to $10 million, in a bid to boost its e-commerce business which grew by 167 per cent in the December half.
Maggie Beer has entered a conditional agreement to acquire all shares in HGA, giving it ownership of The Hamper Emporium and Gifts Australia which have a combined revenue forecast of $36.4 million this financial year along with expected earnings of more than $9 million.
The $40 million upfront payment will be half cash and half scrip, while the remaining $10 million will depend on the businesses meeting a $10 million earnings target in FY23.
The group is backing the acquisition with a $30 million capital raising at $0.35 per share, representing a 4.1 per cent discount to yesterday's closing price.
All directors and the CEO have indicated their intentions to participate in the capital raising.
"It is a key strategy of the MBH Group to grow its e-commerce and direct to consumer business," says MBH CEO Chantale Millard.
"This exciting opportunity will allow us to do this whilst partnering with a fantastic e-commerce hamper and gifting business, which has an amazing team and is very profitable and cash generating."
"The most exciting thing for me is that ability to have a direct link to our customer, that online sales provide. We can learn so much about each other! Hampers & Gifts Australia is the perfect business for us to partner with to do this," says MBH's namesake and non-executive director Maggie Beer.
HGA co-founder and creative director Emily McWaters will continue in her role at the company once it is under MBH ownership.
"There is significant mutual benefit across the two businesses, and we look forward to working with Chantale and the team to create an even better customer experience," McWaters says.
"Maggie Beer is a premium iconic Australian gourmet brand that will only further enhance our offering of affordable luxury.
"I grew up in South Australia and live on Kangaroo Island, and so a partnership with an iconic South Australian brand such as Maggie Beer could not be more perfect."
The combined groups are expected to generate annual revenue of more than $85 million.
"From our dispatch operations in Sydney, we can't wait to make it even easier for households Australia-wide to enjoy iconic Maggie Beer products in their homes, whether that be for gifting or personal use," says HGA CEO Amy McWaters.
"Having spent time with Chantale and her team, there is a clear alignment in company culture and drive for continued improvement and growth."
A trading halt for MBH shares is due to be lifted on Thursday, 1 April with the retail entitlement offer closing on 19 April. The acquisition will then be voted on at an extraordinary general meeting (EGM) likely to be held on 13 May.
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