Woolworths has announced its plan to acquire a majority stake of MyDeal.com.au, which is a significant step for the retailer into the eCommerce space, where it aims to compete against big names including Amazon, Kogan and Catch.
The Woolworths Group has entered into a scheme implementation agreement to acquire approximately 80 per cent of the share capital of the ASX-listed online marketplace, for cash consideration of $1.05 per share.
The offer price indicates an enterprise value of a whopping $243 million, with MyDeal’s founder and CEO, Sean Senvirtne, to retain an approximate 20 per cent interest in MyDeal, along with other key management shareholders.
The transaction is subject to a number of customary conditions, including MyDeal shareholder approval, ACCC approval and court approval.
MyDeal shareholder meetings are expected to be held in Q3 calendar 2022, where the deal will be officially considered and approved.
Woolworths to take on ecommerce giants
Woolworths' MyDeal move will allow the retail giant to enhance their offering in the eCommerce space alongside major competitors Amazon, Kogan and Catch.
Major online marketplaces thrived during the COVID-19 onset, with Amazon Australia reporting that their income doubled in 2020 alone.
With the deal set to "enhance marketplace capabilities", Woolworths and MyDeal will also be set to take on major Australian retail leaders Kmart, Bunnings and Target.
Woolworths' MyDeal move follows the supermarket giant's 2013 acquisition and subsequent sale of multichannel online retailer EziBuy.
The acquisition cost the Woolworths Group approximately $350 million and was intended to boost the retailer's online capabilities, particularly for Big W.
During the last year of their partnership, however, EziBuy reported a $15 million loss. In 2017, Woolworths sold EziBuy to investment company Alceon Group for an undisclosed sum.
Agreement to mutually enhance transaction capabilities
MyDeal’s success in furniture and homewares in the online space is reportedly set to enhance Woolworths’ marketplace capabilities in retailing similar items.
“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,” Woolworths Group CEO Brad Banducci said.
MyDeal’s growth is predicted to be continually supported with access to the Woolworths Group’s platforms and capabilities.
“The MyDeal team is excited by the opportunity to partner with Woolworths Group,” Senvirtne said.
“It will help support the growth of our retail platform by accessing Woolworths Group’s capabilities across ecommerce, supply chain, retail, loyalty and more."
MyDeal has more than 1 million active customers and a generated Gross Transaction Value of $260 million in the 12 months to Mar 31, 2022.
Major shareholders in favour of transaction
The MyDeal board has unanimously recommended shareholders vote in favour of the transaction after concluding the scheme will serve the interests of shareholders.
Senvirtne, who currently holds 47.3 per cent of MyDeal shares, has stated his intention to vote in favour of the transaction, while also granting Woolworths Group a call option of more than 19.9 per cent of MyDeal shares.
MyDeal shareholders Silver Glove and Aavasan - which together hold more than 28.6 per cent of MyDeal shares - have also advised MyDeal they intend to vote in favour of the transaction.