Woolworths (ASX: WOW) is looking to enhance its online marketplace offering by taking a controlling stake in e-commerce player MyDeal.com.au (ASX: MYD), announcing a proposal today to buy 80 per cent of the target for $218 million.
The proposal, backed by MyDeal’s board including founder and CEO Sean Senvirtne, gives the company an equity value of $271.8 million, and at $1.05 per share represents a major premium for shareholders of 62.8 per cent to yesterday’s closing price.
As part of the deal, Senvirtne would walk away with more than $77 million after he sells 60 per cent of his current majority stake in MyDeal to retain just 18.9 per cent. Fellow executives Kate Dockery (a founding MyDeal member and Senvirtne’s partner) and Dean Ramler would retain 0.5 per cent and 0.4 per cent in MYD respectively.
“The transaction is a highly attractive proposition for MyDeal shareholders and represents a significant premium to MyDeal’s share price,” said Senvirtne, who was named the number 21 Top Young Entrepreneur for 2021.
“I am excited to retain a significant and continued interest in MyDeal and to lead the business through its next stage of growth to become Australia’s leading marketplace.
“The entire MyDeal team is looking forward to partnering with Woolworths Group, which will deliver a step change in the growth of our retail platform by accessing sector leading capabilities across ecommerce, supply chain, retail, loyalty and more.”
In addition to retaining about 20 per cent of the company, the MYD key management team will continue to lead the business in partnership with Woolworths if the deal proves successful, with Senvirtne to keep his job as CEO of the e-commerce retailer.
Founded in 2011 and listed on the ASX in 2020, Melbourne-based MYD is one of Australia’s leading online marketplaces hosting approximately 1,900 sellers offering more than six million products with a particular focus on furniture, homewares, and everyday items.
The company boasts more than one million active customers, and generated $260 million in gross transaction value in the 12 months to 31 March 2022.
Woolworths says MYD is attractive considering it would complement its existing marketplace capabilities and enhance its position in the furniture, homewares and bulky goods segments.
“The addition of MyDeal to Woolworths Group represents a further step towards delivering a more holistic customer experience in food and everyday needs and materially expands our marketplace capabilities, especially in general merchandise,” WOW CEO Brad Banducci said.
The transaction remains subject to shareholder, court and regulator approval, with a shareholder meeting to vote on the deal expected to be held in the third quarter of the 2022 calendar year.
“The Scheme is an attractive transaction which provides an all-cash option for MyDeal shareholders,” MYD chairman Paul Greenberg said.
“The MyDeal Board has unanimously concluded that the Scheme represents a compelling outcome for our shareholders, customers, suppliers, and staff. The cash consideration of $1.05 per share represents a highly attractive premium to current trading levels and a premium to the IPO price."
The premium on the December 2020 IPO when the company raised $40 million is just 5 per cent, and are well below share price highs of $1.71 achieved on listing.
“The price is a very tangible measure of the value and quality of MyDeal’s industry-leading online marketplace platform. At a significant premium to the current trading price, Woolworths Group’s offer provides MyDeal shareholders with certainty of value and the opportunity to realise their investment in full for cash," Greenberg added.
For MYD, the announcement comes just a few months after announcing it had surpassed one million active shoppers - with returning buyers accounting for 61 per cent of all online transactions in January 2022.
It also follows the release of MYD’s Q3 trading update, which demonstrated a 35.2 per cent increase in gross sales to $60.4 million on the prior corresponding period.
The company also recently announced the launch of its experiences marketplace Amazed.com, where it sells activities from more than 250 suppliers including Melbourne Zoo, Global Ballooning and Experience Co.
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